strategy: analysis and practice slide 1 ©the mcgraw-hill companies, 2005 7. competitive strategy:...
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Strategy: Analysis and Practice
Slide 1 ©The McGraw-Hill Companies, 2005
7. Competitive strategy: The analysis of strategic capability
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Strategy: Analysis and Practice
Slide 2 ©The McGraw-Hill Companies, 2005
Outline● The resource-based view of the firm● The language of resources and
capabilities● The importance of intangibles● Determining the value of competences● Linking the market-based and resource-
based views● Competence-based competition● Competitive strategy in practice
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Strategy: Analysis and Practice
Slide 3 ©The McGraw-Hill Companies, 2005
Introduction
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Strategy: Analysis and Practice
Slide 4 ©The McGraw-Hill Companies, 2005
The Resource-based View of the Firm
Resource-based View• Firm as a bundle of
resources and capabilities.
• Distinct resources and capabilities underpin competitive advantage.
• Specific combination and coordination of resources critical.
• Strategy based on skilled diagnosis and creative solutions.
Market-based View• Firm as a unit in a
market.• Distinct position in
market underpins competitive advantage.
• Detailed knowledge of market and competitive conditions critical.
• Strategy based competitive analysis and appropriate value creation.
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Strategy: Analysis and Practice
Slide 5 ©The McGraw-Hill Companies, 2005
The Language of Resources and Capabilities
● Resources: inputs into a firm’s operations so as to produce goods and services.
● Capabilities: The ability to perform a task or activity that involves complex patterns of coordination and cooperation.
● Rents: a surplus of revenue over cost.● Strategic assets / Core competencies:
resources and capabilities that can earn rents.
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Strategy: Analysis and Practice
Slide 6 ©The McGraw-Hill Companies, 2005
Core Competence
Core Competences
Collective knowledge of
how to coordinate skills
and technologiesPrahalad & Hamel
(1990)
Distinctive Capabilities
Business processes
connected to customer needs
Stalk, Evans & Shulman (1992)
Strategic Assets
Capacity to deploy
resources to effect a desired
end
Amit & Shoemaker (1993)
= =
The underlying capability that is the distinguishing characteristic of the organization
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Strategy: Analysis and Practice
Slide 7 ©The McGraw-Hill Companies, 2005
Identifying Intangibles● Intellectual property rights of patents,
trademarks, copyright and registered designs● Trade secrets● Contracts and licenses● Databases● Information in the public domain● Personal and organizational networks● The know-how of employees, advisers, suppliers
and distributors● The reputation of products and of the company● The culture of the organization
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Strategy: Analysis and Practice
Slide 8 ©The McGraw-Hill Companies, 2005
The Value of a Core Competence
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Strategy: Analysis and Practice
Slide 9 ©The McGraw-Hill Companies, 2005
Identifying Key Success Factors
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Strategy: Analysis and Practice
Slide 10 ©The McGraw-Hill Companies, 2005
Strategic Industry Factors and Core Competences
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Strategy: Analysis and Practice
Slide 11 ©The McGraw-Hill Companies, 2005
Matching Resources and Markets
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Strategy: Analysis and Practice
Slide 12 ©The McGraw-Hill Companies, 2005
Resources and Capabilities
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Strategy: Analysis and Practice
Slide 13 ©The McGraw-Hill Companies, 2005
Positioning the Business for Growth
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Strategy: Analysis and Practice
Slide 14 ©The McGraw-Hill Companies, 2005
Assessing Feasibility
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Strategy: Analysis and Practice
Slide 15 ©The McGraw-Hill Companies, 2005
Concluding Remarks● Competitive advantage defines the
market-based view – the positioning of the firm in terms of competitors
● Core competence defines the resource-based view – the underlying capability that is the distinguishing characteristic of the organization.
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Strategy: Analysis and Practice
Slide 16 ©The McGraw-Hill Companies, 2005
Concluding Remarks (continued)
● Core competence underpins market positioning and thus competitive advantage.
● The resource-based view demands attention to processes, resource leverage and intangibles.
● Resources are linked to competitive advantage through key success factors.