1. Analysing resources and capabilities
Chapter 4
Analysing resources and capabilities
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

2. Analysing Rs & Cs
Not all resources and capabilities have the same importance
Some resources and capabilities are required to do business, but have little impact on performance because they are standard (“best practice”) or because everybody has the same (eg. telephone)
How can we identify those Rs & Cs that make a difference?
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

3. VRIE A ressource or capability that makes a difference is:
Creating high Value for the customer (V) -better than “best practice”
Rare (R): not everybody has it -ideally it is unique
Difficult/costly to imitate (I): competitors will have trouble getting the same
Exploited (E) by the firm: the firm is organised to make the best usage of the R/C
Resources and capabilities that satisfy V and R and I and E are foundations competitive advantage
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

4. Value: Apple’s design capability
“The Company’s business strategy leverages its unique ability (...) to bring to its customers new products and solutions with superior ease-of-use, seamless integration, and innovative industrial design.” (Apple Annual Report 2005, p.1)
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

5. Value: in the eye of the beholder
The importance of context
Example:
sophisticated software in Sony cameras:
valued by Japanese customers
cursed by American buyers
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

6. Rare: Argyle Diamonds
Rio Tinto’s Argyle mine (WA) is the world’s largest producer of pink diamonds
The Argyle mine is a rare resource: only 1 diamond in every million is pink
Pink diamonds sell at a premium compared to standard “white” and “brown” varieties
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

7. Imitation: Coke and 3M Coke: Brands 3M: Innovation
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

8. Exploitation: Argyle Special auctions for pink diamonds:
Viewing in New York, Sydney, Tokyo, Hong Kong, London and Geneva
Once-a-year event for jewellers
Bidding by buyers: maximising ‘pink’ prices
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

9. 4.3 VRIE at Belo Are Belo’s resources and capabilities V, R, I, and E?
Resources / capabilities V R I E
Modern, medium-sized store
Friendly staff
Association with wholesaler
Innovativeness
Location in growth suburb
Special orders
Promotions
Free delivery
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

10. 4.3 VRIE at Belo Are Belo’s resources and capabilities V, R, I, and E?
Resources / capabilities V R I E
Modern, medium-sized store
Yes No
Friendly staff
Association with wholesaler ?
Innovativeness
Location in growth suburb
Special orders
Promotions
Free delivery
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

11. VRIE and competitive advantage
Competitive advantage: performance superior to the average of competitors
Only few firms have a genuine competitive advantage
Few resources / capabilities will satisfy ‘VRIE’
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

12. Distinctive competence
A firm obtains competitive advantage when it has developed a “distinctive competence”: it offers to its customers something that is unique (“distinctive”) and better than the average (“competence”)
A distinctive competence is a combination of resources and capabilities
VRIE resources / capabilities are the foundation for distinctive competence
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

13. Time and strategy
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

14. Strategy: choice and consistency
It is difficult to be all things to all people: lack of focus, costs
It is difficult to outperform competitors in all areas
It is possible to be outstanding in a few things ... provided requisite investments are made
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

15. Generic distinctive competences
Building competitive advantage by focusing on one (or two) of four factors where the firm will aim for outstanding performance ...
Efficiency
Quality
Innovation
Customer responsiveness
... whilst performing to standard (‘best practice’) on the others
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

16. Efficiency
IKEA’s competitive advantage in furniture retailing is built on efficiency:
design for cost and simple assembly
standardisation: economies of scale with suppliers
flat-packs to save on logistics
combining store and warehouse to save on handling
getting customers to do some of the work
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

17. Quality BMW cars offer superior quality and attract premium prices:
engineering excellence
driving experience
materials
craftsmanship
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

18. Innovation
Apple has developed a competence in innovation, bringing together functionality, design, and user-friendly experience:
iPod: convergence of MP3 (music) & MP4 (video) mobility, internet downloads, simple interface, seamless integration with iTunes and store
iPhone: combining mobile phone, widescreen iPod, internet communications and personal organiser
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

19. Customer responsiveness
St George Bank is Australia’s fifth largest
Strategy of good service and close customer relationships
Rewarding staff for quality of service and customer satisfaction
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

20. Several distinctive competences?
Distinctive competence requires investment and time
Trade-offs between generic competences
e.g. effectiveness and responsiveness
Some exceptional companies can combine two:
e.g. Toyota: quality and effectiveness through manufacturing system
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

21. 4.5 New Norcia resource analysis
Resources / capabilities V R I E
Synthesis
3 stores/cafes
Wood-fired ovens
Bread-making skills
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

22. 4.5 New Norcia resource analysis
Resources / capabilities V R I E
Synthesis
3 stores/cafes Y N
V, E
Wood-fired ovens ?
V, R, E
Bread-making skills
V, R, I, E
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

23. 4.5 Brumby’s resource analysis
Resources / capabilities V R I E
Synthesis
Capital
Electric ovens
300 Shops
Marketing
Retail skills
Standardisation
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak

24. 4.5 Brumby’s resource analysis
Resources / capabilities V R I E
Synthesis
Capital Y ? N
V, E
Electric ovens
300 Shops
V, R, I, E
Marketing
Retail skills
Standardisation
Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Strategic Analysis: A Guide to Practice, by Waldersee
Slides prepared by Robert Waldersee and Stephane Tywoniak