chapter4-internal-scanning.ppt

1、Chapter4 internal scanning:organizational analysisInternal analysislWhat are the firms strength?lWhat are the firms weakness?lHow do these strengths and weaknesses compare to competitors?Internal analysis provides a comparative look at a firms capabilities The resource-based view(RBV)lKey questionWh

2、y do some firms achieve better economic performance than others?lexplains how firms can achieve competitive advantage and superior economic performancelassumes that a firms resources and capabilities are the primary drivers of competitive advantage and economic performanceResources and capabilitiesl

3、Resourcestangible and intangible assets of a firmTangible:factories,productsIntangible:reputation,techniquelCapabilitiesa subset of resources that enable a firm to take full advantage of other resourcesmarketing skill,cooperative relationshipslIn many cases,resources and capabilities are not clearly

4、 distinguishableTwo critical assumptions of the RBVlResource heterogeneitydifferent firms may have different resourceslResource immobilityit may be costly for firms without certain resources to acquire or develop themsome resources may not spread from firm to firm easilyWhy resource determine compet

5、itive advantagelThree important questions:ValueRarityImitabilitylIf a firm has resources that are valuable,rare,and costly to imitate,and the firm is organized to exploit these resources,then the firm can expect to enjoy a sustained competitive advantage.The question of valuelin theory:Does the reso

6、urce enable the firm to exploit an external opportunity or neutralize an external threat?lthe practical:Does the resource result in an increase in revenues,a decrease in costs,or some combination of the two?Example:Levis reputation allows it to charge a premium for its pantsThe question of raritylif

7、 a resource is not rare,then perfect competition dynamics are likely to be observed(i.e.,no competitive advantage,no above normal profits)la resource must be rare enough that perfect competition has not set inlthus,there may be other firms that possess the resource,but still few enough that there is

8、 scarcity several pharmaceuticals sell cholesterol-lowering drugs,but the drugs are still scarceThe question of imitabilitylthe temporary competitive advantage of valuable and rare resources can be sustained only if competitors face a cost disadvantage in imitating the resourceintangible resources a

9、re usually more costly to imitate than tangible resourcesExplicit knowledge vs.tacit knowledgeif there are high costs of imitation,then the firm may enjoy a period of sustained competitive advantagea sustained competitive advantage will last only until a duplicate or substitute emergesif a firm has

10、a competitive advantage,others will attempt to imitate it(e.g.,Apples ipod)Barriers to imitation lUnique historical conditions First mover advantagesPath dependenceEvents early in evolution of a process have significantly effects on subsequent events.lCasual ambiguity causal links between resources

11、and competitive advantage may not be understoodbundles of resources fog these causal linksBarriers to imitationlSocial Complexity the social relationships entailed in resources may be so complex that managers cannot really manage them or replicate themlPatentsoffer a period of protection if the firm

12、 is able to defend its patent rightsrequired disclosure may actually decrease the cost of imitation,and the timingFramework of RBV Firm Resource HeterogeneityFirm resource ImmobilitySustained Competitive AdvantageValueRarenessImperfect ImitabilityHistory DependentCausal AmbiguitySocial ComplexitySub

13、stitutabilityImplications of RBVlTo gain competitive advantage,a firm should exploit its own valuable,rare,costly-to-imitate resources.lOrganization should support the use of valuable,rare,and costly-to-imitate resources.If not,the organization should be changed.Core competencelThe diversified corpo

14、ration is a large tree.The trunk and major limbs are core products,the smaller branches are business units,the leaves,flowers,and fruit are end products.The roots that provides nourishment,sustenance,and stability is the core competence.lCore competenceThe collective learning in the large organizati

15、on,especially how to coordinate diverse production skills and integrate multiple streams of technologies.Examples:Sonys capacity to miniaturize Core competencelP&G core competenceA deep understanding of consumers,their habits and product needs Capability to acquire,develop and apply technology acros

16、s P&Gs broad array of product categories The ability to make connections between consumers wants and what technology can deliverCore competenceCore competenceIdentifying Core CompetencieslThree testsFirst,core competence provides potential access to a wide variety of markets.Second,a core competence

17、 should make a significant contribution to the perceived customer benefits of the end product.Finally,a core competence should be difficult for competitors to imitate.Source:Prahalad and Hamel,The Core Competence of the corporation,1990,Harvard business reviewValue-chainlValue chain:a linked set of

18、value-creating activities beginning with basic raw materials coming from suppliers,to a series of value-added activities involved in producing and marketing a product or service,and ending with distributors getting the final goods into the hands of the ultimate consumer.lFirm may only be a small par

19、t.Raw materialsPrimary manufacturingFabricationProduct producerDistributorRetailerIndustry value chain analysislValue chains of most industries can be split into two segments,upstream and downstream halves.lEven if a firm operates up and down the entire industry chain,it usually has an area of prima

20、ry expertise where its primary activities lie.lA companys center of gravity is the part of the chain that is most important to the company and the point where its greatest expertise and capabilities.lOutsourcing vs.integratingPorters value chain Porters value chainPorters value chainlThe systematic

21、examination of individual value activities can lead to identify any core or distinctive competencies.lValue chain analysisWhich activities can be considered strength or weakness?Linkages are the connections between the way one value activity is performed and the cost of performance of another activi

22、ty.Examine the potential synergies among the value chains of different product line or business units.Economic of scopeScanning internal resourceslInternal resource analysisMarketingFinancingR&DOperationsHuman resourcesInformation systemStructurecultureTypical organization structurelSimple structure

23、:appropriate for a small,-entrepreneur-dominated company with one or two product line.lFunctional structure(u-form):appropriate for a medium-size firm with several product lines in one industry.Employees are specialists in the business function.lDivisional structure(M-form):appropriate for a large c

24、orporation with many product lines in several related industry.lConglomerate structure:appropriate for a large corporation with many product lines in several unrelated industry.Strategic PlanningCorporate FinanceCorporate R&DCorporate MarketingProductionFinanceEngineeringAccountingHuman ResourcesDiv

25、isionDivisionDivisionSales&MarketingSenior ExecutiveCorporateHumanResourcesBoard of DirectorsStrategic business unitslStrategic business units(SUBs):independent product-market segments that are given responsibility and authority for the management of their own functional areas.A unique missionIdenti

26、fiable competitorsAn external market focusControl of its business functionsCorporate culturallCorporate cultural:collection of belief,expectation,and values learned and shared by a corporations members and transmitted from one generation of employees to another.It generally reflect the values of the

27、 founders and the mission of the firm.lA strong culture should not only promote survival,but also create the basis for superior competitive position.It is a source of competitive advantage.Corporate culturallElements of corporate culturalThe Paradigm:What the organization is about;what it does;its m

28、ission;its values.Control Systems:The processes in place to monitor what is going on.There would be more reliance on individualism in a power culture.Organizational Structures:Reporting lines,hierarchies,and the way that work flows through the business.Power Structures:Who makes the decisions,how wi

29、dely spread is power,and on what is power based?Corporate culturallElements of corporate culturalSymbols:These include organizational logos and designs,but also extend to symbols of power such as parking spaces and executive washrooms.Rituals and Routines:Management meetings,board reports and so on

30、may become more habitual than necessary.Stories and Myths:build up about people and events,and convey a message about what is valued within the organization.Culture and CommunicationLow-ContextHigh-Context(Individualism)(Collectivism)Context vs.ContentContent is more Context is more important import

31、antStatusAnyone can be a friendStatus consciousExpressionClear expressionAmbiguousGet to the pointBeat around the Induction bush,DeductionBest sourcesExperts,successfulOld males,famous peoplefamiliesI/WeUse“I”frequentlyUse“we”frequentlyMediumLinguisticParalinguisticsVerbalBody-language(silence,touch

32、ing,distance)Corporate culturallCultural intensity:the degree to which members of a unit accept the norms,values,or other cultural content associated with the unit.lCultural integration:the extent to which units throughout an organization share a common cultureStrategic market issuelSTP strategyMark

33、et segmentation:tailoring products for specific market niches.Targeting:a process of prioritizing target segments based on the firms core competencies or capabilities.Market position:the selection of specific areas for marketing concentration and can be expressed in term of market,product,and geogra

34、phic locations.Strategic market issueStrategic market issuelMarketing mixProductPlacePromotionpriceStrategic market issuelProduct life cycleR&D issuelR&D intensity:spending on R&D as a percentage of sales revenue.Computer industry:13.2%Drug industry:11.5%lTechnology competence:the proper management

35、of technology,in both the development and the use of innovative technology.lTechnology transfer:the process of taking a new technology from the laboratory to the marketplace.R&D issuelR&D mixBasic R&D:focus on theoretical problem areas and is typically undertaken by scientists in well-equipped labor

36、atories.PatentResearch publicationProducts R&D:focus on marketing and is concerned with product or product-packaging improvements.Number of successful new productEngineering or process R&D:focus on improving quality control,design specification and production equipment.Consistent reductions in unit

37、manufacturing costsProduct defectsR&D issuelR&D mix:the balance of the basic,product,process R&D research.The mix should be appropriate to the strategy and the product life cycle.lTechnological discontinuity:the displacement of one technology by another.S-shaped curveThe key competitiveness is to de

38、termine when to shift resources to a technology more potential.History has shown that as one technology nears the end of its S curve,competitive leadership in a market generally changes handsStrategic operation issuelExperience curve:unit production costs decline by some fixed percentage(commonly 20

39、-30%)each time the total accumulated volume of production doubles.lReasons for effectLabor efficiencyScale economiesProduct and process improvementLower raw materials costslManagerial implicationExperience curve leads to lower costs,which can lead to lower prices,which can lead to increased market s

40、hare,which can lead to increased profitability and market dominance.Experience curveStrategic operation issuelFlexible manufacturing is a manufacturing system in which there is some amount of flexibility that allows the system to react in the case of changes.lEconomic of scope:the average total cost

41、 of production decreases as a result of increasing the number of different goods produced.Strategic human resource issuelAutonomous work team:a group of people works together without a supervisor to plan,coordinate,and evaluate its own work.lCross-functional work team:a group of people with different functional expertise working toward a common goal.lConcurrent engineering:the once-isolated specialists work side by side and effort to design cost-effective products with features customers want.lHuman diversity:the mix in the workplace of people from different races,cultures,and background.