Académique Documents
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Motiur Rahman
Resource Based Approach organizational analysis
Resources: VRIO Framework
Resource : an asset, competency, process,
controlled by an corporation
1. Values: Does it provide competitive
advantage?
2. Rareness: Do other competitors possess it?
3. Imitability: Is it costly for others to imitate?
4. Organization: Is the firm organized to exploit
the resources
Chapter 4 2
Core Competencies and Distinctive
Competencies
Core Competencies
• Things a corporation can do exceedingly well
Distinctive Competencies
• Core competencies that are superior to those of
competitors
Chapter 4 3
Using Resources to Gain Competitive
Advantage
1. Identify and classify firms resources in terms of
strengths and weaknesses
2. Combine firm’s strength into core competency
and distinctive competency
3. Appraise the profit potential of these resources
and capabilities for sustainable competitive
advantage and the ability to harvest profits
resulting from the use these resources and
capabilities
4. Select the strategy that can best exploit the
firm’s resources and capabilities relative to
external opportunities
5. Identify resource gaps in upgrading weaknesses
Chapter 4 4
Determining The Sustainability Of An Advantage
Chapter 4 5
Types of Knowledge
1. Explicit knowledge:
2. Tacit Knowledge:
Chapter 4 7
Typical Value Chain for a Manufactured
Product
Chapter 4 8
Corporate Value Chain
Firm Infrastructure
(general management, accounting, finance, strategic planning)
Chapter 4 10
Scanning Functional Resources
Chapter 4 11
Basic Structures of Corporations:
Simple and Functional
I. Simple Structure
Owner-Manager
Workers
Top Management
Chapter 4 12
Basic Structures of Corporations: Divisional
Top Management
Chapter 4 13
Strategic Business Unit
Independent product-market unit with:
1.Unique mission
2.Identifiable competitors
Chapter 4 14
Analyzing Corporate structure
Chapter 4 15
Attributes of Corporate Culture
Chapter 4 17
Analyzing Corporate Culture
1. Is there well defined or emerging culture composed
of shared beliefs, expectations and values
Chapter 4 18
Strategic Marketing Issues
• Market position and segmentation
(who are our customers)
• Marketing mix
Chapter 4 19
Marketing Mix Variables
Product Place Promotion Price
Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment
periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns
Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs,
N.J.: Prentice-Hall, 1980), p. 89. Copyright © 1980. Reprinted by permission of Prentice-Hall, Inc.
Chapter 4 20
Sales
The Product Life Cycle
Chapter 4 22
R&D Mix
• Basic R&D :
Focus: theoretical problem areas
Indicator of capability: number of patents and research
publications
• Product R&D
Focus: Products and /or packaging improvements
Indicator of capability: number of successful new
products introduced and profits coming from products
introduced within 5 years
• Process (Engineering) R&D
Focus: Engineering concentrating on quality control,
development of design specifications and production
equipment
Indicator of capability: Consistent reductions in unit
manufacturing costs, number of product defects
Chapter 4 23
Analyzing R&D Function
Mature
Technology
New
Technology
Research Effort/Expenditure
Chapter 4 25
Strategic Operations Issues
Chapter 4 26
Strategic Operations Issues
• It has fairly low break-even point , but its variable
cost line has a relatively steep slope. Because most of
the cost associated with the product are variable , a
job shop’s variable cost is higher than the automated
firms
Chapter 4 27
• Continuous systems are those laid out as lines on which
product can be continuously assembled or processed
• A firm using continuous system invests heavily in fixed
assets investments.
• Its labor force is relatively small but highly skilled, earns
salaries rather than piece rate wages
• This firm has high amount of fixed costs and relatively high
breakeven point, but variable cost line rise slowly. This
called operating leverage, the impact of specific change in
sales volume on net operating income
• The advantage of high operating leverage is that once firms
reaches break even its profits rises heavily
• Continuous systems reap the benefit of economies of scale
• Its strategy, the firm should find high demand niche in the
market place for which it should produce and sell large
quantities of goods
Chapter 4 28
Experience Curve
• Suggest that unit production cost declines by fixed
percentage ( commonly 20 – 30%) each time the total
accumulated production volume in units doubles
• The actual percentage varies by industry and is based
on many variables: the amount of time it takes a person
to learn a new task, scale economies, product and
process improvements, lower material costs.
• Management commonly uses the experience curve in
estimating the production cost
(1)A product never made before with present techniques
and processes
(2)Current products being produced by newly introduced
techniques or processes
• Many firms use experience curve extensively, an
unquestioning it could be risky and the experience
curve may not hold true for a particular company for a
variety of reasons
Chapter 4 29
Flexible Manufacturing For mass
Customization
• The use of computer aided designs, computer
aided manufacturing, robot technology means
that learning times are shorter and products
could be manufactured economically in small
customized batches called mass customization
– the low cost of production of individually
customized goods or services
• Economies of scope : common parts of the
manufacturing activities of the various
products are combined to gain economies of
scale, even though small number of products
are made to replace economies of scale
• Flexible manufacturing: permits low volume
output of custom –tailored products at a
relatively low cost through economies of scope
Chapter 4 30
Economies of Scale versus Scope
Economies of Scale
versus
Economies of Scope
Chapter 4 31
Analyzing Operations/ Logistic Function
Chapter 4 32
Analyzing Finance Function
Chapter 4 34
> when the company finances its activities by sales of
bonds or notes instead through stock, earning per
shares are boosted:
- The interest paid on debt reduces taxable income , but
fewer shareholders share profits than if the company
had sold more stock to finance its activities
- The debt however raise the breakeven point above
what it would have been than if the firm had financed
through internally generated funds
- High leverage may be perceived as corporate strength
in times of prosperity and ever increasing sales or
weakness in times of recession and falling sales
- Research indicates that greater leverage has positive
impact on performance for firms in a stable
environment, but a negative impact on firms in dynamic
environment
Chapter 4 35
Capital Budgeting
Chapter 4 37
Internal Factor Analysis Summary (IFAS)
Weighted
Internal Factors Weight Rating Score Comments
1 2 3 4 5
Strengths
Weaknesses
Notes: 1. List strengths and weaknesses (5–10 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not
Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to
1.00. 3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor. 4. Multiply
each factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. Use Column 5 (comments) for rationale
used for each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how
well the company is responding to the strategic factors in its internal environment.
Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and
Hunger Associates. Reprinted by permission. Chapter 4 38
4.17 Internal Factor Analysis Summary (IFAS): Maytag as Example (Table
4.2)
Strengths 1 2 3 4 5
• Quality Maytag culture .15 5 .75 Quality key to success
• Experienced top management .05 4 .20 Know appliances
• Vertical integration .10 4 .40 Dedicated factories
• Employee relations .05 3 .15 Good, but deteriorating
• Hoover’s international orientation .15 3 .45 Hoover name in cleaners
Weaknesses
• Process-oriented R&D .05 2 .10 Slow on new products
• Distribution channels .05 2 .10 Superstores replacing
small dealers
• Financial position .15 2 .30 High debt load
• Global positioning .20 2 .40 Hoover weak outside the
United Kingdom and
Australia
• Manufacturing facilities .05 4 .20 Investing now