1. ANALYSIS OF THE FIRM Resources and Capabilities

2. Industry and Firm Analysis Industry Opportunities STRATEGY Firm Resources and Capabilities “Industry Structure” “Firm Capability” -Analyze industry structure -Superior product positioning in an attractive industry -Analyze firm resources -Develop unique resources and capabilities HOW TO BUILD SUSTAINABLE COMPETITIVE ADVANTAGE

3. Creating Competitive Advantage StrategyProfit Strategy: goal and set of policies designed to achieve competitive advantage in a particular marketplace Competitive Advantage: ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitors Firm Competitive Advantage Shareholder Value

4. Resource-based View  Ability of Firm to compete is impacted by strengths and weaknesses  Resources and Capabilities  Core Competence defines the essential characteristics and abilities of the company

5. Resources of the Firm  Tangible Assets  Financial Resources  Physical Assets  Intangible Resources  Culture  Reputation - Brand  Technology  Human Resources  Skills  Motivation  Team work - communication

6. Capabilities  Unique set of Resources  Strength relative to the competition  Capabilities - Core Competence

7. Core Competence  Capabilities or Competences are the Collective Learning in the Organization  Cross-Functional Capability to coordinate diverse skills and integrate multiple streams of technology  Work across organizational boundaries  Complex Harmonization of individual resources and skills

8. Core Competence 1. Access to wide variety of markets 2. Significant contribution to perceived end-user benefits 3. Difficult to Imitate

9. Capability Example Wal*Mart  Store Location  Distribution  Technology – Information System  Culture - Human Resources  Style of Leadership

10. Capability Example Coca-Cola  Reputation – Brand  Financial Strength

11. Capability Example Intel  First-to-Market  Branding  Financial Resources

12. Creating Capabilities  Leverage Resources  Concentrate  Accumulate  Complement  Conserve  Recover

13. Appraising Capabilities  Durability  Transferability  Replicability

14. Capabilities Analysis  Identify Key Resources / Capabilities  Appraise Resources and Capabilities  Assess Importance  Assess Relative Strength (Benchmarking)  Identify Resources / Capabilities High in Importance and Strength  Develop Strategy  Exploit Key Strengths  Manage Key Weaknesses – Development

15. Capability Development  Develop Internally  Acquisition  Strategic Alliance  Sequencing

16. Capability Development  Internal implications of new, developing resources and capabilities  Incubation

17. Summary Resources Capabilities Potential Strategy 1.Identify the Firm’s Resources and Capabilities 2.Explore linkages between Resources and Capabilities 3.Appraise the Firm’s Resources and Capabilities in terms of: a.Strategic importance b.Relative Strength 4.Develop strategy implications: a.In relation to strengths – How can they be exploited? b.In relation to weaknesses – Develop or Acquire Outsource Grant, Contemporary Strategy Analysis