Analyzing Resources & Capabilities • The role of resources and capabilities in strategy formulation. • The resources of the firm • Organizational capabilities • Appraising the profit potential of resources and capabilities • Putting resource and capability analysis to work—a practical guide • Creating new capabilities. OUTLINE
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Analyzing Resources & Capabilities
Analyzing Resources & Capabilities
• The role of resources and capabilities in strategy formulation.
• The resources of the firm• Organizational capabilities• Appraising the profit potential of resources and
capabilities • Putting resource and capability analysis to work
—a practical guide• Creating new capabilities.
OUTLINE
THE FIRM
Goals and Values
Resources andCapabilities
Structure and Systems
THE INDUSTRYENVIRONMENT
•Competitors•Customers•Suppliers
STRATEGYSTRATEGY
The Firm-Strategy
Interface
TheEnvironment-Strategy
Interface
Shifting the Focus of Strategy Analysis:From the External to the Internal Environment
Shifting the Focus of Strategy Analysis:From the External to the Internal Environment
Rationale for the Resource-based Approach to Strategy
Rationale for the Resource-based Approach to Strategy
• When the external environment is subject to rapid change, internal resources and capabilities offer a more secure basis for strategy than market focus.
• Resources and capabilities are the primary sources of profitability
Resources Physical Plant and equipment: Market value of size, location, technology fixed assets.flexibility. Scale of plantsLand and buildings. Alternative uses forRaw materials. fixed assets
Technology Patents, copyrights, know how No. of patents ownedR&D facilities. Royalty income
Intangible Technical and scientific R&D expenditureResources employees R&D staff
What Determines Organizational Capability in Football?
Who are the outstandingly
successful team managers
(coaches) in British football?
Matt Busby Manchester U. 1945-70
Alf Ramsey Ipswich 1955-64
Bill Shankley Liverpool 1959-74
Jock Stein Glasgow Celtic 1965-78 Brian Clough Derby/Notts F. 1972-84
Bob Paisley Liverpool 1974-83
Alex Ferguson Aberdeen 1980-86 Manchester U. 1986-
Arsene Wenger Monaco 1985-95Arsenal 1996-
Jose Mourinho Porto 2000-04 Chelsea 2004-
Building Team Capabilities in Soccer: Alex Ferguson at Manchester United
•Find/develop young playersScouting staff doubled— “find the best.”Building youth team—1992 youth team included Ryan Giggs, David Beckham, Paul Scholes, Nicky Butt, Gary Neville
•Training •State-of-the-art training complex•Rigorous training schedule (+war on booze)
•Developing coordination•Training for team skills•Building team spirit—“team functions with single spirit & constant flow of mutual support”; “Talent without unity of purpose is hopeless”
•Structuring the team Build a core of group internally Supplement with key purchases•Blending personalities as well as skills•Player rotation for experimentation & flexible coordination
Building the wider team—coaches, scouts, physiotherapists, psychologists, even cleaners
•Cross-functional integration
4. Develop strategy implications: (a) In relation to strengths--How can these be exploited more effectively and fully? (b) In relation to weaknesses --Identify opportunities to outsourcing activities that can be better performed by other organizations. --How can weaknesses be corrected through acquiring and developing resources and capabilities?
3. Appraise the firm’s resources and capabilities in terms of:
(a) strategic importance(b) relative strength
2. Explore the linkages between resources and capabilities
1. Identify the firm’s resources and capabilities
STRATEGY
CAPABILITIES
RESOURCES
POTENTIAL FOR SUSTAINABLE COMPETITIVE ADVANTAGE
Summary: A Framework for Analyzing Resources and CapabilitiesSummary: A Framework for Analyzing Resources and Capabilities
1) Why the surge of interest in knowledge management (KM)?--kn. as the key resource of the firm
--giving us a better understanding of management
2) What is KM?
3) What progress have we made, what are the key gaps, which areas are likely to add most value?
4) Developing strategy: Exploiting strengths, protecting and eliminating weaknesses
5) Building the capability base: Can it be done? How?
6) What can be learn from Knowledge Management?
7) Implications for organizational structure.
1) Why the surge of interest in knowledge management (KM)?--kn. as the key resource of the firm
--giving us a better understanding of management
2) What is KM?
3) What progress have we made, what are the key gaps, which areas are likely to add most value?
4) Developing strategy: Exploiting strengths, protecting and eliminating weaknesses
5) Building the capability base: Can it be done? How?
6) What can be learn from Knowledge Management?
7) Implications for organizational structure.
OUTLINE
Knowledge Management and the Knowledge-based View of the Firm
Knowledge Management and the Knowledge-based View of the Firm
What is Knowledge Management?What is Knowledge Management?
Definition:“The systematic leveraging of information and expertise to improve organizational innovation, responsiveness, productivity and competency.” (Lotus division of IBM)
I T
I T
On-the-job
Training
On-the-job
Training
New Product Development
New Product Development
Benchmarking
Benchmarking
ResearchResearch
Customer &Market Analysis
Customer &Market Analysis
Intellectual Property
Protection
Intellectual Property
Protection
BestPracticeTransfer
BestPracticeTransfer
CommunicationsCommunications
ScenarioAnalysis
ScenarioAnalysis
Strategic AlliancesStrategic Alliances
IntellectualCapital
Accounting
IntellectualCapital
AccountingCourses & SeminarsCourses & Seminars
T Q MT Q MLessons
learned
Lessons
learned CRMCRM
Data mining
Data mining
E R PE R P
IndividualIndividual OrganizationOrganization
ExplicitExplicit
TacitTacit
InformationFacts
Scientific kn.
DatabasesSystems & procedures
Intellectual property
SkillsKnow-how
Organizational routines
Types of
Knowledge
Types of
Knowledge
Levels of knowledgeLevels of knowledge
Types & Levels of Knowledge (and Knowledge Conversion)
Types & Levels of Knowledge (and Knowledge Conversion)
IndividualIndividual OrganizationOrganization
ExplicitExplicit
TacitTacit
InformationFacts
Scientific kn.
DatabasesSystems & procedures
Intellectual property
Skills Organizational capabilities
CRAFTENTERPRISES
‘INDUSTRIAL’ ENTERPRISESTypes
ofKnowledge
Types of
Knowledge
Levels of knowledgeLevels of knowledge
Replication through Knowledge SystematizationReplication through Knowledge Systematization
EXAMPLES• Ford• McDonalds• Starbucks•Accenture
EXAMPLES• Ford• McDonalds• Starbucks•Accenture
Knowledge Transfer MechanismsKnowledge Transfer MechanismsDISSEMINATION
BREADTH
Many
Few
ABILITY TO CODIFYHigh (explicit
kn.. & informationLow (know-how &
contextual kn..)
Personneltransfer
Internalconsultants
On-the job training
Trainingseminars
&courses
Communities-of-practice
Communities -of-interest
Informalvisits
Dataexchange
Shared data
bases
E-mailGroup-ware
Telephone
Fax
Videoconferencing
Meetings
Rules, procedures & directives
Manuals &reportsModular integration
Designing a Knowledge Management System
• What kn. processes which are critical to creating value & competitive advantage? --Dow: creating and exploiting patents --McKinsey & Co.: sharing kn. & retaining experienced consultants --Accenture: systematization.)
• What are the characteristics of the relevant kn.?
• What mechanisms are needed for the generation and application of the relevant kn.?
• What organizational conditions need to be in place in order for knowledge management mechanisms to work?
---Organizational structures---Incentives to contributors and users