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Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Tomislav Rimac – Fall 2012
Escola Superior de Comerç Internacional - UPF
INTERNATIONAL MANAGEMENT Lecture 7: Organizational Strategy
Tomislav Rimac – Fall 2013
Universitat Autònoma de Barcelona – ADE in English – 3 rd^ year
STRATEGIC MANAGEMENT I Presentation 3: Examining the Internal Environment -
Resources, Capabilities, and Activities
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 1
Explain the internal context of strategy
Identify a firm’s resources, capabilities, and explain their
role in its performance
Explain VRIO (VRINE) model and its relations to firm’s
performance
Explain how value-chain activities are related to firm
performance and competitive advantage
Explain outsourcing and offshoring
Objectives
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 2
1. INTERNAL CONTEXT OF STRATEGY
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 3
ROA
ROS
Global Auto
Comparative Withon Industry Performance
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 6 Comparative Within Industry Performance Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 7 Comparative Within Industry Performance How do such differences in profitability materialize?
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 8 Measures Of Performance Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 9 Difference In Performance
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 12
Resources, Capabilities, And Managerial Decisions
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 13
2. RESOURCES, CAPABILITIES,
AND PERFORMANCE
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 14
The inputs that firms use to
create goods and services
Undifferentiated or firms-specific
Tangible or intangible
Easy to acquire or difficult
A firm’s skill in using its
resources to create goods and
services
The combination of procedures
and expertise that the firm relies
on to engage in distinct activities
in the process of producing goods and
services
Strategy
R & C: Fundamental Building Blocks Of Strategy Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 15 Tangible
Resources and
capabilities that are
observable and easily
quantified
Broadly organized in
three categories:
Financial
Physical
Technological
Intangible
Resources and
capabilities not easily
observed or difficult (or
impossible) to quantify
Examples include:
Human (knowledge)
Innovation
Reputation
Trust
Understanding Resources
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 18 (^1) Trust is an intangible resource A trustworthy reputation for a firm can be leveraged
Trust As An Organizational Resource Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 19
Knowledge as
a resource
Explicit (easy
competitive
intelligence)
Tacit (more
valuable)
Knowledge As An Organizational Resource
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 20 Explicit knowledge - knowledge that can be easily articulated and communicated Tacit knowledge - knowledge that is not easily communicated because it is deeply rooted in employee experience or in the company’s culture Types Of Knowledge Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 21 Corporate reputation - a widely held perception of a company by the general public Stakeholders’ perceptions of quality Corporation’s prominence in the minds of stakeholders Corporate Reputation As An Organizational Resource
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 24 Examples Of Capabilities Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 25 Competency - a cross-functional integration and coordination of capabilities Core competency - a collection of competencies that cross divisional boundaries, is wide-spread throughout the corporation and is something the corporation does exceedingly well Distinctive competency - core competencies that are superior to those of the competition Core And Distinctive Competencies
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 26 Asset endowment Acquired from someone else Shared with another business Built and accumulated within the company Access To A Distinctive Competency Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 27 Clusters - geographic concentrations of interconnected companies and industries Access to:
Employees
Suppliers
Information
Complementary products
Access To A Distinctive Competency
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 30
Mail Boxes Etc. franchise
Value
Dynamic capability:
how we integrate recon-
figure, acquire, or divest
resources for competitive
advantage?
Mail boxes, etc.,
has developed the
ability to combine
resources better
than the
competition
Start-up plans
People
Brand
Location
Processes
Dynamic Capabilities Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 31 Dynamic capabilities are firm processes that integrate, reconfigure, acquire, or divest resources to achieve new configurations of resources and capabilities Especially important to firms in fast paced competition Dynamic Capabilities
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 32 Dynamic capabilities manifest in several ways:
The ability to integrate different resources and capabilities to
create new revenue producing products and services
Reconfiguring or transferring resources and capabilities from
one division to another
The re-bundling of resources and capabilities through alliances
and acquisitions
Dynamic Capabilities Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 33 Identify and classify resources in terms of strengths and weaknesses Combine the firm’s strengths into specific capabilities and core competencies Appraise profit potential
Are there any distinctive competencies?
Using Resources To Gain Competitive Advantage
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 36
Internal Factor Analysis – Maytag Example
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 37
3. THE VRIO (VRINE) MODEL
Universidad Autònoma de Barcelona – ADE – Tomislav Rimac
Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 38 Are firm’s resources and capabilities?
Valuable
Rare
Imitable
Organization is built around them
VRIO Framework (Barney) Universidad Autònoma de Barcelona – ADE – Strategic Management I Tomislav Rimac – Fall 2013 39 Four fundamental questions of VRIO Value: do the resources and capabilities ADD value?
Necessary for a competitive advantage
Rarity: how rare are the valuable resources and capabilities?
Valuable, but common = parity, not advantage
Valuable and rare = can lead to temporary advantage
If everyone has it, you can’t make money from it
The VRIO Framework: Value And Rarity
