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Chapter03
The document discusses strategic capabilities for organizations. It defines strategic capabilities as the resources and competencies needed for an organization to survive and prosper. It outlines different types of resources, competencies, and core competencies. It also discusses how strategic capabilities can provide competitive advantage if they are valuable, rare, inimitable, and non-substitutable. Managers can develop strategic capabilities through activities like value chain analysis, benchmarking, and SWOT analysis.
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Chapter03
- 1. The Strategic Position 3: Strategic Capability
- 2. Learning Outcomes (1) Distinguish elements of strategic capability in organisations: resources, competences, core competences, and dynamic capabilities Recognise the role of continual improvement in cost efficiency as a strategic capability Analyse how strategic capabilities might provide sustainable competitive advantage on the basis of their value, rarity, inimitability, and nonsubstitutability Exploring Corporate Strategy 8e, © Pearson Education 2008 3-2
- 3. Learning Outcomes (2) Diagnose strategic capability by means of value chain analysis, activity mapping, benchmarking, and SWOT analysis Consider how managers can develop strategic capabilities of organisations Exploring Corporate Strategy 8e, © Pearson Education 2008 3-3
- 4. Core Concepts in Strategic Capability Foundations Cost efficiency Sustainability Organisational knowledge Analysis Development Exploring Corporate Strategy 8e, © Pearson Education 2008 3-4
- 5. What is StrategicCapability? Strategic capability refers to the resources and competences of an organisation needed for it to survive and prosper. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-5
- 6. Exhibit 3.1 StrategicCapabilities and Competitive Advantage Exploring Corporate Strategy 8e, © Pearson Education 2008 3-6
- 7. What are Resources? Tangible resources are physical assets of an organisation such as plant, labour, and finance. Intangible resources are non-physical assets such as information, reputation, and knowledge. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-7
- 8. Resource Categories Physical resources Financial resources Human resources Intellectual capital Exploring Corporate Strategy 8e, © Pearson Education 2008 3-8
- 9. The Terminology of Strategic Capability Threshold resources Threshold competences Unique resources Core competences Exploring Corporate Strategy 8e, © Pearson Education 2008 3-9
- 10. What are CoreCompetences? Core competences are the skills and abilities by which resources are deployed through an organisation’s activities and processes such as to achieve competitive advantage in ways that others cannot imitate or obtain. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-10
- 11. Exhibit 3.3 Sourcesof Cost Efficiency Economies of scale Experience Cost efficiency Product design Supply costs Exploring Corporate Strategy 8e, © Pearson Education 2008 3-11
- 12. The Experience Curve Competences in activities develop over time based on experience, resulting in cost efficiencies Growth may not be optional Unit costs should decline year on year First mover advantage is important Exploring Corporate Strategy 8e, © Pearson Education 2008 3-12
- 13. Exhibit 3.4 TheExperience Curve Exploring Corporate Strategy 8e, © Pearson Education 2008 3-13
- 14. Capabilities for achievingand sustaining competitive advantage Value Rarity Inimitable Substitution Dynamic Exploring Corporate Strategy 8e, © Pearson Education 2008 3-14
- 15. Rarity of StrategicCapabilities Ease of transferability Sustainability Core rigidities Exploring Corporate Strategy 8e, © Pearson Education 2008 3-15
- 16. Core Competences Leadto Competitive Advantage When… They relate to an activity that underpins the value in the product features They lead to levels of performance that are significantly better than competitors They are difficult for competitors to imitate Exploring Corporate Strategy 8e, © Pearson Education 2008 3-16
- 17. Strategic Capability forthe Royal Opera House Exploring Corporate Strategy 8e, © Pearson Education 2008 3-17
- 18. Exhibit 3.5 Criteriafor Inimitability Complexity Culture and Robustness of strategic capability history Causal ambiguity Exploring Corporate Strategy 8e, © Pearson Education 2008 3-18
- 19. What are DynamicCapabilities? Dynamic capabilities are an organisation’s abilities to renew and recreate its strategic capabilities to meet the needs of a changing environment. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-19
- 20. Dynamic Capabilities atHMD Clinical Exploring Corporate Strategy 8e, © Pearson Education 2008 3-20
- 21. What is OrganisationalKnowledge? Organisational knowledge is the collective experience accumulated through systems, routines, and activities of sharing across the organisation. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-21
- 22. Diagnosing Strategic Capability Activity maps Value chain/ Value network Benchmarking SWOT analysis Exploring Corporate Strategy 8e, © Pearson Education 2008 3-22
- 23. What is aValue Chain? A value chain describes the categories of activities within and around an organisation, which together create a product or service. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-23
- 24. Exhibit 3.6 TheValue Chain Exploring Corporate Strategy 8e, © Pearson Education 2008 3-24
- 25. What is a Value Network? A value network is the set of interorganisational links and relationships that are necessary to create a product or service. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-25
- 26. Exhibit 3.7 TheValue Network Exploring Corporate Strategy 8e, © Pearson Education 2008 3-26
- 27. Understanding the Capabilities in Relation to the Value Network Which activities are central important to organisation’s strategic capability? Where are the profit pools? What should be outsourced? Who might be the best partners in the parts of the value network? Exploring Corporate Strategy 8e, © Pearson Education 2008 3-27
- 28. Exhibit 3.8 AnActivity System Map Exploring Corporate Strategy 8e, © Pearson Education 2008 3-28
- 29. Lessons Learned fromActivity Maps Consistency and reinforcement Difficulties of imitation Trade-offs Exploring Corporate Strategy 8e, © Pearson Education 2008 3-29
- 30. Approaches to Benchmarking Historical benchmarking Industry/sector benchmarking Best-in-class benchmarking Exploring Corporate Strategy 8e, © Pearson Education 2008 3-30
- 31. SWOT Analysis StrengthsWeaknesses Opportunities Threats Exploring Corporate Strategy 8e, © Pearson Education 2008 3-31
- 32. Limitations in Managing Strategic Capabilities Competences valued but not understood Competences are not valued Competences are recognised, valued, and understood Exploring Corporate Strategy 8e, © Pearson Education 2008 3-32
- 33. Developing Strategic Capabilities Add and change Extend Stretch Exploit Cease Develop externally Exploring Corporate Strategy 8e, © Pearson Education 2008 3-33
- 34. Case Example: eBay Analyse eBay’s strategic capability. Exploring Corporate Strategy 8e, © Pearson Education 2008 3-34
Editor's Notes
- #17 Use eBay video, begin at 4:54 through 5:31 (section on eBay's effect on small antique shops)
- #20 Use clip from eBay video, begin at 5:32 and go to 6:13 (section on eBay and car market)
- #30 Insert section from eBay clip: 6:30-7:44 on percentage of fraud
- #35 Use clip from eBay video, start at 1:50 through 2:14 (on value of customers for eBay)