STRATEGIC CAPABILITY. Chapter 2 External Environment What the Firm Might Do Chapter 3 Internal...
-
Upload
lewis-houston -
Category
Documents
-
view
215 -
download
1
Transcript of STRATEGIC CAPABILITY. Chapter 2 External Environment What the Firm Might Do Chapter 3 Internal...
BY:VEDIKA SARAFSWAGATA GIRIYUKTI AGARWALVIKRAM PESSWANIVIVEK SOOD SRISHTI SETHSUMALYA CHAKRABORTYTANUSHREE VIJAYWARGITARUN VOHRA
STRATEGIC CAPABILITY
Chapter 2Chapter 2External EnvironmentExternal EnvironmentWhat the Firm Might DoWhat the Firm Might Do
Chapter 3Chapter 3Internal EnvironmentInternal EnvironmentWhat the Firm Can DoWhat the Firm Can Do
SustainableCompetitiveAdvantage
Changing strategic capability better to fit a changing environment.
Creation of new opportunities by stretching and exploiting the strategic capability.
STRATEGY DEVELOPMENT
RESOURCES
There are two types of resources: Tangible resources:
Eg: Buildings, plant, labor and finance
Intangible resources:
Eg: Information, reputation and knowledge
NIZATI RESOURCESSOURCES
Physical resources
Financial resources
Human resources
Intellectual resources
Resources Competences
Threshold capabilities
Threshold resources•Tangible•Intangible
Threshold competences
Unique Resources:Resources that provide competitive advantage
Core competence:Competence that cannot be easily imitate or obtained
STRATEGIC CAPABILITIES AND COMPETITIVE ADVANTAGE
Capabilities for competitive advantage
Cost Efficiency
This can be achieved through: Appropriate Resources Managing those resources Attaining cost efficiency has become
important for companies Value for money Competitive rivalry
Cost Efficiency
Cost Drivers Economies of Scale Supply Cost Product/ Process Design Experience
So, with the help of all these drivers companies can get relative cost advantage over competitors.
Capabilities For Sustainable Competitive Advantage
Value for customers:
Strategic capabilities of the organization should provide value to the customers.
Rarity of strategic capabilities:• Achieve resources which are rare in nature like
Specific individual• Organization having secured preferred access to
customers or supplier• Organizations having advantage by achieving the
sunk cost.
Robustness of strategic capabilities
It involves identifying capabilities that are likely to be durable and which competitors find difficult to imitate or obtain.
Complexity
Internal linkages
External linkages Culture and history Causal ambiguity
Characteristic ambiguity
Linkage ambiguity
NON-SUBSTITUTABILITY
Possessing competencies that are complex, culturally embedded & causally ambiguous.
Related to 5 forces model of competition. E.g. E-mails substituting postal service.
Substitution at competence level. i.e. Skills
DYNAMIC CAPABILITIES
Change competencies to meet the needs of rapid changing environment.
Acquisitions or Alliances.
Build capacity to change, innovate and learn.
ORGANISATIONAL KNOWLEDGE
Accumulated through systems, routines and activities.
Required due to organizational complexity and sophisticated information systems.
Essential social process relying on communities of interest.
Higher degree of formality leads to danger of imitation.
Value Chain
It describes the activities within and around an organization which together create a product or service.
Determines whether or not the best value products or services have been developed.
SupportActivities
Primary Activities
Inb
ou
nd
L
og
isti
cs
Value Chain AnalysisValue Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
SupportActivities
Primary Activities
Inb
ou
nd
L
og
isti
cs
Op
erat
ion
s
Value Chain AnalysisValue Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
SupportActivities
Primary Activities
Inb
ou
nd
L
og
isti
cs
Op
erat
ion
s
Ou
tbo
un
dL
og
isti
cs
Value Chain AnalysisValue Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
SupportActivities
Primary Activities
Inb
ou
nd
L
og
isti
cs
Op
erat
ion
s
Ou
tbo
un
dL
og
isti
cs
Mar
keti
ng
&
Sal
es
Value Chain AnalysisValue Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
SupportActivities
Primary Activities
Inb
ou
nd
L
og
isti
cs
Op
erat
ion
s
Ou
tbo
un
dL
og
isti
cs
Mar
keti
ng
&
Sal
es
Ser
vice
Value Chain AnalysisValue Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
SupportActivities
Primary Activities
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
ou
nd
L
og
isti
cs
Op
erat
ion
s
Ou
tbo
un
dL
og
isti
cs
Mar
keti
ng
&
Sal
es
Ser
vice
MARGIN
MARGIN
Value Chain AnalysisValue Chain AnalysisIdentifying Resources and Capabilities That Can Add Value
Value Network
The set of inter organizational links and relationships that are necessary to create a product or service.
It is important for any organization to understand the basis of their strategic capabilities in relation to the wider value network.
Value Network
Identify activities are centrally important to their own strategic capability.
Identify the profit pools. Decide to make or to buy. Know the best partners in various parts
of the value network and the relationships to be developed with them.
ACTIVITY MAPS
Tries to show how different activities of an organisation are linked together.
How is it mapped? Critical Success factors(CSF) Consistency Reinforcement Difficulties in imitation(built over a long period of time
culturally embedded, complex & causally ambiguous) Trade Offs
BENCHMARKING Benchmarking is the process of determining who is the very
best, who sets the standard, and what that standard is.
Application of benchmarking involves four key steps:
(1) Understand in detail existing business processes.
(2) Analyze the business processes of others.
(3) Compare own business performance with that of others
analyzed.
(4) Implement the steps necessary to close the performance gap.
TYPES OF BENCHMARKING1. Historical Benchmarking
- Comparing with self
- Complacent
2. Industry/sector Benchmarking
- Comparing with firms within the same industry or similar firms
- Firms in other industries that can satisfy the same needs
- Industry convergence
3. Best-in-class benchmarking
- Best practices
- Ex. British airways – aircraft processes from Formula one
VALUE OF BENCHMARKING
It is a process for gaining momentum for improvement and change rather than mechanics of comparisons.
It may lead to a situation where you get what you measure but it is not what you intended to measure strategically. As a result, if the basis of benchmarking is flawed it can set off a reorientation of strategies that are flawed.
Only identifies good and bad performance but not the reasons for such performance.
SWOT ANALYSISIt explores the relationship between the environmental influences and the strategic
capabilities of an organization compared to its competitors.
Competitor SWOT analyses
• A positive (+) score denotes that the strength of the company would help it take advantage of, or counteract a problem arising from an environmental change or that a weakness would be offset by that change. • A negative (–) score denotes the strength would be reduced by such change or that a weakness would prevent the organization from overcoming problems associated with that change.
Managing Strategic Capability
Limitations of managing strategic capabilities
*Competences are values but not understood
*Competences are not valued
*Competences are recognized, valued and understood
Stretching and adding capabilities
*Extending best practices
*Ceasing activities
*Adding and changing activities
*External capability dev.
*Stretching competences
*Building on apparent weaknesses
Managing Strategic Capability
Managing People for capability development
*Targeted training and development
*HR policies
*Develop people’s awareness
Building dynamic capabilities
*Learning Organization
*Knowledge creation-
1) Socialization
2)Externalization
3)Combination
4)Internalization
THANK YOU