Internal Resources

The Value Chain Sequential process of value-creating activities The amount that buyers are willing to pay for what a firm provides them Value is measured by total revenue Firm is profitable to the extent the value it receives exceeds the total costs involved in creating its product or service The benefits of streamlining a business with value chain management include: Lower infrastructure costs associated with collaboration. Create commonality in parts and suppliers. Control inventory by getting the supply chain talking to the demand chain. Cut transaction costs by integrating with public and private exchanges. Deliver products to market faster while minimizing risk and capital investment. Adapted from Exhibit 3.1 The Value Chain: Primary and Support Activities Source: Adapted with permission of The Free Press, a division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter.

Resource-Based View of the Firm Basic Assumption Types of resources Tangible resources Intangible resources Organizational capabilities Organizational competencies Dynamic Capabilities Firms consist of a heterogeneous resource base

Innovation and creativity Intangible Resources Human Innovation and creativity Reputation Intangible Resources are difficult for competitors (and the firm itself) to account for or imitate, typically embedded in unique routines and practices that have evolved over time Human Experience and capabilities of employees Trust Managerial skills Firm-specific practices and procedures Innovation and creativity Technical and scientific skills Innovation capacities Reputation Brand name Reputation with customers Reputation with suppliers

From Firm Resources to Sustainable Competitive Advantages Is the resource or capability… Valuable Rare Difficult to imitate Difficult to substitute Adapted from Exhibit 3.7 Four Criteria for Assessing Sustainability of Resources and Capabilities

Criteria for Sustainable Competitive Advantage and Strategic Implications Exhibit 3.8 Criteria for Sustainable Competitive Advantage and Strategic Implications Source; Adapted from J. Barney, “Firm Resources a Sustained Competitive Advantage, ‘ Journal of Management 17 (1991), pp. 99-120.

Management preferences Diamond – E Model Management preferences Organization Resources Strategy External Environment

Discussion?