Leveraging Resources and Capabilities

Leveraging Resources and Capabilities Outline

33 Leveragi aging Resources and C Capabilities c h a p t e r chater Part I: Foundations of Global Strategy Gl G ob o a b l a S t S r t a r t a e t g e y g Mike Mi ke W. Pen Pe g n Copyright © 2009 Cengage. PowerPoint Presentation by John Bowen, Columbus State Community College All rights reserved.

Outline • Understanding resources and capabilities• Resources, capabilities, and the value chain • The VRIO framework • Debates and extensions • The savvy strategist Copyright © 2009 Cengage. All rights reserved. 3–2

Understanding Resources and Capabilities • Tangible • Intangible Resources and Resources and capabilities that are capabilities not easily observable and easily observed or dif icult (or quantified impossible) to quantify Broadly organized in Examples include: four categories:  Human  Financial  Innovation  Physical  Reputational  Technological Organizational Copyright © 2009 Cengage. All rights reserved. 3–3

Examples of Resources and Capabilities TANGIBLE RESOURCES AND CAPABILITIES EXAMPLES Financial Ability to generate internal funds Ability to raise external capital Physical Location of plants, offices, and equipment Access to raw materials and distribution channels Technological Possession of patents, trademarks, and copyrights Organizational Formal planning, command, and control systems Integrated management information systems INTANGIBLE RESOURCES AND CAPABILITIES EXAMPLES Human Knowledge Trust Managerial talents Organizational culture Innovation A supportive atmosphere for new ideas Research and development capabilities Capacities for organizational innovation and change Reputational Perceptions of product quality, durability, and reliability among customers Reputation as a good employer Reputation as a socially responsible corporate citizen Sources: Adapted from (1) J. Barney, 1991, Firm resources and sustained competitive advantage (p. 101), Journal of Management, 17: 101; (2) R. Grant, 1991, Contemporary Strategy Analysis (pp. 100–104), Cambridge, UK: Blackwell; (3) R. Hall, 1992, The strategic analysis of intangible resources (pp. 136–139), Strategic Management Journal, 13: 135–144. Table 3.1 Copyright © 2009 Cengage. All rights reserved. 3–4

Resources, Capabilities, and the Value Chain • Value Chain The functional activities within the firm that create value in the goods and services produced • Components of the Value Chain Primary activities  Are directly associated with the development, production, and distribution of goods and services Support activities  Assist in the accomplishment of primary activities Copyright © 2009 Cengage. All rights reserved. 3–5

The VRIO Framework: Features of a Resource or Capability COSTLY TO EXPLOITED BYORGANIZATION VALUABLE? RARE? IMITATE? COMPETITIVE IMPLICATIONS FIRM PERFORMANCE No No Competitive disadvantage Below average Yes No Yes Competitive parity Average Yes Yes No Yes Temporary competitive advantage Above average Yes Yes Yes Yes Sustained competitive advantage Consistently above average Sources: Adapted from (1) J. Barney, 2002, Gaining and Sustaining Competitive Advantage, 2nd ed. (p. 173), Upper Saddle River, NJ: Prentice Hal ; (2) R. Hoskisson, M. Hitt, & R. D. Ireland, 2004, Competing for Advantage (p. 118), Cincinnati: Thomson South-Western. Table 3.2 Copyright © 2009 Cengage. All rights reserved. 3–9

The VRIO Framework: Value and Rarity • Four fundamental questions of VRIO Value: do the resources and capabilities add value?  Necessary for a competitive advantage Rarity: how rare are the valuable resources and capabilities?  Valuable, but common parity, not advantage  Valuable and rare can lead to temporary advantage  If everyone has it, you can’t make money from it Copyright © 2009 Cengage. All rights reserved. 3–10

The VRIO Framework: Imitability • Easier to imitate tangible resources/capabilities than tangible ones • Two ways to imitate – direct duplication and substitution Direct duplication most dif icult Substitution less chal enging, but not easy • Why is imitation so difficult? Hard to acquire in a short time what competitors have developed over a long time Events earlier in time af ect future events Dif icult to identify causal determinants of performance Copyright © 2009 Cengage. All rights reserved. 3–11

The VRIO Framework: Imitability (cont’d) • Valuable, rare, but imitable resources/capabilities = temporary advantage • Only valuable, rare and hard-to-imitate resources/capabilities = sustained competitive advantage Copyright © 2009 Cengage. All rights reserved. 3–12

The VRIO Framework: Organization • The Question of Organization How is a firm organized to develop and leverage the ful potential of its resources and capabilities? • Using complementary assets effectively• Managing social complexity effectively Invisible relationships can add value make imitation more dif icult Copyright © 2009 Cengage. All rights reserved. 3–13

Debates and Extensions • Firm- versus Industry-Specific Determinants of Performance: Both views are complementary to each other • Static Resources versus Dynamic Capabilities• The resource-based view: incorporating dynamic capabilities Tacit knowledge “Learning before doing” versus “learning by doing” Simple rules to guide behavior and decisions Develop new resources/capabilities Less bundled resources/capabilities Copyright © 2009 Cengage. All rights reserved. 3–14

Dynamic Capabilities in Slow- and Fast-Moving Industries SLOW-MOVING INDUSTRIES FAST-MOVING (HIGH-VELOCITY) INDUSTRIES Market environment Stable industry structure, defined boundaries, Ambiguous industry structure, blurred boundaries, clear business models, identifiable players, fluid business models, ambiguous and shifting linear and predictable change players, nonlinear and unpredictable change Attributes of Complex, detailed, analytic routines that Simple, experiential routines that rely on newly dynamic capabilities rely extensively on existing knowledge created knowledge specific to the situation (“learning before doing”) (“learning by doing”) Focus Leverage existing resources and capabilities Develop new resources and capabilities Execution Linear Iterative Organization A tightly bundled collection of resources A loosely bundled collection of resources that are with relative stability frequently added, recombined, and dropped Outcome Predictable Unpredictable Strategic goal Sustainable competitive advantage A series of short-term (temporal) (hopefully for the long term) competitive advantages Sources: Adapted from (1) K. Eisenhardt & J. Martin, 2000, Dynamic capabilities: What are they? Strategic Management Journal, 21: 1105–1121; (2) G. Pisano, 1994, Knowledge, integration, and the locus of learning, Strategic Management Journal, 15: 85–100. Table 3.3 Copyright © 2009 Cengage. All rights reserved. 3–15

The Savvy Strategist • Developing resources/capabilities that are valuable, rare, hard-to-imitate, and embedded in organizational structures and systems can help firms achieve successful performance • Lessons from the VRIO framework Task for strategists build firm strengths by identifying, developing, and leveraging resources/capabilities Imitation is not likely to be a successful strategy Sustained competitive advantage wil not last forever Firms should try to develop “strategic foresight” Copyright © 2009 Cengage. All rights reserved. 3–16

The Savvy Strategist (cont’d) • Four fundamental questions: Resource Based Views Why do firms dif er? Resource heterogeneity How do firms behave? Take advantage of strengths and overcome weaknesses What determines the scope of the firm? How a firm performs relative to rivals What determines the international success and failure of firms? Firmspecific resources/capabilities and a bit of luck Copyright © 2009 Cengage. All rights reserved. 3–17

Download Leveraging Resources and Capabilities Powerpoint Presentation

By downloading this powerpoint presentation file, you agree to our terms of use. If you interesting in "Leveraging Resources and Capabilities" powerpoint themes, you can download to use this powerpoint template for your own presentation template. For viewing only, you can play with our flash based presentation viewer instead of downloading the ppt file.