Ch.05 Internal

8/18/2019 Ch.05 Internal

1/28

InternalEnvironment:Resources &

Capabilities

Ch. 5


2/28

From External to Internal

THEINDUSTRYENIR!N"ENT

• Competitors

• Customers

• Suppliers

STR#TE$Y

The

Environment-Strategy Interface

THE FIR"

•$oals an%alues

•Resources an%

Capabilities

•Structure an%Sstems

The Firm-Strategy

Interface


3/28

• Functional #nalsis 'HIF!R"S(

• )es to Core Competenc 'RIN(

• #spects o* Inimitabilit 'CUTTS(

Internal Elements


4/28

• Divi%e +rm up into %i,erent elements

• #ssess aspects o* eac-

•

Determine level o* stren.t- or/ea0ness

• Searc- *or elements o* corecompetencies

Internal #nalsis


5/28

FIR" INFR#STRUCTURE

HU"#N RES!URCE "#N#$E"ENT

TECHN!1!$Y DEE1!2"ENT

2R!CURE"ENT

IN3!UND !2ER#TI!NS !UT3!UND "#R)ETIN$SERICE

1!$ISTICS 1!$ISTICS & S#1ESPRIMARY

ACTIVITIES

SUPPORT

ACTIVITIES

2orter4s alue C-ain


6/28

• Human Resources – Trainin.5 motivation an% compensation

o* t-e /or0*orce

– 3ot- sstems an% personnel

– General Electric, Pepsico

Functional #nalsis'HIF!R"S(


7/28

• In*rastructure & In*ormation Sstems – Compan context in /-ic- ot-er

activities occur

• Structure5 control sstems5 culture5lea%ers-ip

– Electronic sstems *or trac0in. +rm

activities – Walmart, Cisco

• Finance –

"onetar resources5 %ebt levels5 &ro+tabilit



8/28

• !perations – Creation o* core .oo% or service

.eneratin. value *or t-e +rm

– Inboun%5 trans*ormation5 outboun%

– !PS, Fo"r Seasons #otels, Singapore $irlines



9/28

• Researc- an% Development – Desi.n o* pro%ucts an% processes

– Resultin. in eit-er .oo%s5 service or

%eliver mec-anisms

– Merc%, $pple, &M, Canon



10/28

• "ar0etin. & Sales – 3ran% positionin.5 a%vertisin.5 pricin.

tactics & sales *orce

– Proctor ' Gamle, P()er

• Service – #*ter sales support5 /arrant &

relations-ip maintenance – Caterpillar



11/28

• De+ne% – Firm6speci+c stren.t-s t-at allo/ a +rm

to .ain competitive a%vanta.e

• T-rou.- %i,erentiation or lo/er costs

– #rise *rom resources an% capabilities

• "a relate to value c-ain *unctions or

to elements /it-in t-em• S-oul% speci+call an% precisel

i%enti* t-ese

Core Competencies


12/28

R e s o u r c e s R e s o u r c e s

CoreCompetencies

Capabilities

•

S0ills at coor%inatin.resources an% puttin. t-emto pro%uctive use

• Uni7ue stren.t-s allo/in.+rm to create superior value

• Tan.ible 'lan%5 e7uipment(or intan.ible 'reputation5patents5 0no/ -o/( assets

o* t-e +rm

Resources an% Capabilities


13/28

• Resources & Capabilities must be: – aluable

– Rare

– Inimitable

– Nonsubstitutable

• You can /in /it- RIN

RIN: )e to CoreCompetenc


14/28

• aluable – Is a relevant )e Success Factor

– 1o/ers cost5 increases %i,erentiation

• Rare – Scarcit: *e/ ot-er companies -ave

t-em

– Example: all +rms -ave /or0ers &bran%s 8 /-at is uni7ue about ours9



15/28

• Inimitable – Dicult to trans*er *rom one +rm to

anot-er

• Not available on t-e open mar0et

• I* so5 re7uires special s0ill or sstem

– Dicult *or +rm itsel* to cop or replicate

it



16/28

• Causal #mbi.uit – Dicult to %iscern reasons *or a +rm4s

success

– !*ten t-e pro%uct o* man little%ecisions

• Uni7ue Histor

– Con%itions -appenin. to one +rm but notanot-er

– 2at- %epen%enc: a%vanta.e %epen%s ont-e se7uence ta0en to ac-ieve it

CUTTS: 3arriers to Imitation


17/28

• Tacitness – Source o* a%vanta.e %icult to

articulate

– 1earnin. b %oin. a *actor

• Time Compression Diseconomies – Ta0es as lon. to imitate as it %oes to

%evelop – 2rovi%es lea% time: %evelop ne/

stren.t-s /-ile ot-ers catc- up



18/28

• Social Complexit – 3ase% on t-e interactions o* man

people5 units an% tec-nolo.ies

– Is inte.rate% an% irre%ucible• 2arts /or0 to.et-er to ac-ieve an

uni+e% result

•

#ll parts are nee%e% to attain t-atresult



19/28

• From easiest to most %icult toImitate – Tan.ible Resources

• Fe/ CUTTS barriers

– Intan.ible Resources

• "a be -ave several CUTTS barriers

– Capabilities• Easil can -ave all CUTTS barriers



20/28

• Nonsubstitutable – Can4t be replace% b an entirel %i,erent

tpe o* resource or tec-nolo.

• ;-at bene+ts %oes resource orcapabilit provi%e9

• ;-at else can provi%e t-ese same

bene+ts9 – Substitution more li0el in %namic

in%ustries

• "ore %icult to sustain an a%vanta.e



21/28

• !nl – Has pai% price o* a%mission but no real

a%vanta.e

• R !nl – No one else -as it5 but /-o /ants it9

• & R !nl – #%vanta.e real but onl temporar

• & I !nl – Unli0el: inimitabilit assumes rarit



22/28

• 5 R & I !nl – #%vanta.e lasts pen%in. some ma


23/28

• #ssume Stren.t-s in > > > – "ar0etin.: stron. bran% name

– R&D: ne/ pro%uct %esi.n capabilities

– !perations: use o* a%vance% in%ustrialrobotics

• 2roce%ure – See -o/ *ar eac- one .oes %o/n t-e

RIN=CUTTS list

RIN: $eneric Example


24/28

• aluable9 – Stron. 3ran% lo/ers customer

ac7uisition costs

– Stron. R&D permits -i.- prices *orinnovative an% cuttin.6e%.e pro%ucts

– Stron. !perations provi%es -i.- 7ualit

at lo/er costs



25/28

• Rare9 – Stron. 3ran% is not rare: ot-er

competitors -ave compellin. bran%s

/it- similar traits – Stron. R&D uncommon in t-e in%ustr?

+rm is an obvious lea%er

–

#%vance% robotics still unusual in t-ein%ustr? +rm -as purc-ase% latesttec-nolo.



26/28

• Inimitable9 – "ar0etin.: not consi%ere% since it /asn4t

rare

• Use CUTTS *or t-e ot-er t/o – R&D: social complexit an% uni7ue

-istor relatin. to creative culture

–!perations: imitable since ot-er +rmscan purc-ase e7uipment & use itmo%ularl



27/28

• Substitutable9 – !perations: not consi%ere% since it /as

inimitable

– R&D: provi%es uni7ue an% cuttin. e%.etec-nolo.5 not to mention t-e @cool*actorA

•

No substitutes *or lea%in. e%.e*eatures

• Cool *actor coul% be substitute%t-rou.- innovative mar0etin.



28/28

• Core Competenc9 – R&D: mostl +ts t-e bill

– !perations: more so t-an mar0etin.5

t-ou.- a%vanta.e is temporar – "ar0etin.: valuable in%ee%5 but not rare

• Strate. s-oul% @t-ro/ t-e best

punc-A – 1evera.e uni7ue stren.t- in R&D


Ch.05 Internal

Documents