what are the 4 ways of diagnosing organisational resources and capabilities?
- benchmarking
- value chain and system
- activity systems mapping
- SWOT analysis
what is benchmarking?
a means of understanding how an organisation compares with its competitors
what are the two approaches to benchmarking
- industry/sector benchmarking
- best-in-class benchmarking
what is industry/sector benchmarking?
compares an organisation’s performance against other organisations in the same industry/sector according to a set of performance indicators
what is best-in-class benchmarking?
- compare against “best-in-class” performance wherever that is found even in a very different industry
- e.g. British Airways can benchmark its refuelling operations against Formula One motor racing pit stops
what is the value chain?
describes the different types of activities an organisation does to make and deliver a product/service
- consists of 5 primary activities, which are directly involved in producing or delivering the product/service, as well as 4 support activities that help the primary ones work better or more efficiently
- competitive advantage can be analysed in any of these activities
what are the 5 primary activities in the value chain?
- inbound logistics
- operations
- outbound logistics
- marketing and sales
- service
what are the 4 supporting activities in the value chain?
- firm infrastructure
- human resource management
- technology development
- procurement
what are the uses of the value chain?
- generic description of activities: understanding how the discrete activities (or clusters of linked activities) contribute to consumer benefit
- analysing the competitive position of an organisation using the VRIO criteria, identifying sources of sustainable competitive advantage
- looking for ways to enhance the value or decrease cost in value activities
uses of the value system
- outsourcing decision: deciding which activities to do ‘in-house’ and which to outsource
- understanding cost/price structures: analysing the best area of focus and the best business model
- identify ‘profit pools’: seek ways to use existing capabilities in order to exploit these
- partnering: deciding whom to work with and the nature of these relationships
what is involved in mapping activity systems?
- identify ‘higher order strategic themes’: that is, how the organisation meets critical success factors in the market
- identify the clusters of activities that underpin these themes and how they are together
- map this in terms of how activity systems are interrelated
using activity system maps
relationship to the value chain
- understanding and identifying strategic capabilities in terms of activities and linkages
importance of linkages and fit
- how can the internal and external activities create value for customers by supporting each other?
relationship to VRIO
- how can these activities and they way they link/fit together be the source of sustainable competitive advantage?
superfluous activities
- are there any activities that do not contribute to value creation?
what is a SWOT analysis?
provides a general summary of the Strengths and Weaknesses explored in an analysis of strategic capabilities, and the Opportunities and Threats explored in an analysis of the environment
what is included in an internal analysis?
- strengths
- weaknesses
what is included in an external analysis?
- opportunities
- threats
explain the TOWS matrix
threats, opportunities, weaknesses and strengths
- SO = generate options here that use strengths to take advantage of opportunities
- WO = generate options here that take advantage of opportunities by overcoming weaknesses
- ST = generate options here that use strengths to avoid threats
- WT = generate options here that minimise weaknesses and avoid threats
what are dynamic capabilities?
means by which an organisation has the ability to renew and recreate its strategic capabilities to meet the needs of changing environments
- an organisation’s core competencies should be used to create short-term competitive positions
- dynamic capabilities view of organisations focuses on the issue of long-term success of organisations
what are some generic dynamic capabilities?
- sensing capabilities: constantly scanning and exploring new opportunities across markets and technologies (e.g. R&D and market research)
- seizing capabilities: addressing opportunities through new products, processes and activities
- re-configuring capabilities: new products and processes may require renewal and re-configuration of capabilities and investment in new technologies
what are redundant capabilities?
capabilities, however effective in the past, can become less relevant as industries evolve and change
- such ‘capabilities’ can become ‘rigidities’ that inhibit change and become a weakness
what are examples of internal capability development?
building and recombining capabilities
- requires creative entrepreneurial skills such as corporate culture that promotes capability innovation
leveraging capabilities
- identifying capabilities in one part of the organisation and transferring them to other parts
stretching capabilities
- building new products or services out of existing capabilities
external capability development
- adding capabilities through mergers acquisitions or alliances
ceasing activities
- non-core activities can be stopped, outsourced or reduced in cost
