1. Strategy Arc STRATEGY Environment Firm
Search for resources and capabilities that provide the firm with sustainable competitive advantage

2. Assumptions All firms are alike and all firms are different
Firms develop unique qualities based on their history, experiences and strategies
Success of individual firms depends on how well firms develop and utilize their skills, resources, and capabilities to
create profits (provide value, control costs)
satisfy their stakeholders
create barriers to competitors

3. Internal Analysis Internal Analysis has two parts
STRATEGY
Firm
Environment
Internal Analysis has two parts
Evaluation of the firms strategy to determine how well the strategy integrates the firm with the external environment.
Systematic analysis of the skills, resources, capabilities, and competencies the firm utilizes to support its strategy

4. Strategy Identify the strategy approach
Firm
Environment
Identify the strategy approach
Rational v. Emergent
Low Cost v. Differentiated v. Integrated
Broad v. Focused
Evaluate the effectiveness of the strategy
Financial
Balanced Scorecard
Stakeholder

5. Models of Business and Strategic Management
STRATEGY
Firm
Environment
Traditional or IO Model
Stakeholder Model
Value Chain Model
Resource-Based View (RBV)

6. IO Model
Views the firm as an economic actor responding to market forces
The external environment is the primary determinant of success
Strategic decisions involve choosing products and markets
Primary Tools:
Industry Analysis
Financial Ratios

7. Stakeholder Model
Views firm as an extended network of relationships and dependencies
Key stakeholders determine sustainability
Primary Tools
Stakeholder Analysis
Financial Ratios

8. Value Chain Model
Views firm as a set of linked value creating activities that transform inputs into outputs
Market determine success
Strategic decisions involve creating superior value at lowest cost
Primary Tools:
External Analysis
Value Chain Analysis
Financial Ratios

9. The Value Chain General administration Human resource management
Technology development
Procurement
Outbound logistics
Inbound logistics
Marketing and sales
Operations
Service

10. Value-Chain Analysis
Firm is profitable to the extent the revenue it receives exceeds the total costs involved in creating its products or services
Value chain analysis involves
identifying key activities that support the firm’s strategy
Evaluating the effectiveness of key activities
Compare the costs and value added of key activities in the value chain
Benchmarking to compare key activities to competitors
VRIN

11. Resource Based View
Views firm as a unique collection of resources and competencies
Unique characteristics of the firm determine success
Strategic decisions involve creating and sustaining competitive advantage through core competencies
Primary Tools:
VRIN Analysis
Financial Ratios

12. Resource Based Model Firm converts inputs into outputs using
Resources: the assets available to a firm to develop and implement value creating strategies
Tangible: assets the firm uses to create value
financial, physical, technological, organizational
Intangible: unique routines and practices that are developed over time
human, creative, reputation, culture
Organizational Capabilities: the procedures and processes the firm has developed to use its resources effectively to achieve desired ends; the ability to put resources to productive use

13. Core Competencies
Competitive advantage is derived from unique resources and capabilities.
Firms distinguish themselves from competitors by developing Core Competencies
The resources of a firm that allow it to differentiate its products or services from competitors
Core competencies are the basis for strategy and competitive advantage
Core competencies are most effective when they are based on intangible resources and organizational capabilities

14. VRIN Analysis
To be a source of sustainable competitive advantage, a resource must have four attributes:
Valuable: Allows the firm to differentiate products/services and create unique value
Rare: Competitors do not have access to the resource
Inimitable: Competitors cannot easily copy or reproduce the resource
Nonsubsitutable: Equivalent resources that may allow similar strategy are not readily available

15. VRIN Analysis Identify key competencies Construct a VRIN Table
Competency
Valuable
Rare
Inimitable
Non- Sub
Conclusion
Superior Engineering
Yes No
Comp. Parity
Automated Production
Temp. comp. adv.
Integrated Design
Sustainable comp. adv.
Look for combinations of capabilities
Assess strategic implications for success