ST Chapter 6

considerations in examining the value chain

- basic mission needs to influence manager's choice of activities to be examined in detail - nature of the value chains and the relative importance of the activities within them that vary by industry - importance of value activities can vary based on a company's position in the broader value system - upstream suppliers and downstream customers - Internet has changed sources of advantages`

difficulties in activity-based cost accounting

- firms may not be easily set up for activity-based cost breakdown - can create redundant work because of financial reporting requirements - time and energy

three basic resources

- tangible assets - intangible assets - organizational capabilities: skills a company uses to transform inputs into outputs

SWOT

Strengths, weaknesses, opportunities, and threats Managers create a quick overview of a company's strategic situation

primary activities

activities in a firm of those involved in the physical creation of the product, marketing, and transfer to the buyer, and after-sale support

support activities

activities in a firm that assist the firm as a whole by providing infrastructure or inputs that allow the primary activities to take place on an ongoing basis

value chain analysis

analysis that attempts to understand how a business creates customer value by examining the contributions of different activities within the business to that value

core competencies

capability or skill that a firm emphasizes and excels in while in pursuit of its overall mission

isolating mechanism

characteristics that make resources difficult to imitate: - physically unique resources - path-dependent resources - casual ambiguity - economic deterrence

3 circles of circle anaylsis

company's offerings, customer's needs, competitors' offerings

benchmarking

comparing the way our company performs a specific activity with a competitor or other company doing the same thing

three circle analysis

competitor benchmarking approach that helps visualize a comparison based on the needs and desired attributes customers seek when buying each company's produce or service

what distinguishes core competencies?

distinctive competencies of each firm - become the base for a lasting competitive advantage

What is SWOT used for

logical framework guiding discussion and reflection about a firm's situation and basic alternatives

resource-based view

method of analyzing and identifying a firm's strategic advantages based on examining its distinct combination of assets, skills, capabilities, and intangibles as an organization **firms differ because each firm posses a different bundle of tangible assets, intangible assets, and organizational capabilities to make use of those assets

value chain

perspective in which business is seen as a chain of activities that transform inputs into outputs that customers value

produce life cycle

used to gauge strength of relevant competencies - introduction: rapid product awareness and market development - growth - maturity: sales slow significantly, increased competition. must differentiate products - decline: increased pressure on margins, declining sales, cost cutting

3 sources of customer value

1. activities that differentiate the product 2. activities that lower its cost 3. activities that meet the customer's needs quickly

steps to identifying valuable resources

1. disaggregate resources - break them down into specific competencies 2. utilize a functional perspective - look at functional areas 3. look at organizational processes 4. use value chain approach 5. use the 4 RBV guidelines to determine which resources are valuable

value of the three circle analysis

1. focuses benchmarking around the needs and wants of customers and the value of what the company offers 2. drills down to a one-on-one customer analysis 3. divides areas of consideration first broadly, and then more specific which yields valuable strategic building blocks

how to conduct a value chain analysis

1. identify activities: divide company's operations into specific business processes and group them into primary and support activities, and focus on analyzable discrete activities 2. allocate costs: attach costs to discrete activities

what makes a resource valuable?

1. is it critical to fulfill customer's needs better than other alternatives? 2. is it scarce? short supply, availability of substitutes, imitation 3. does it drive a key portion of overall profits? appropriability 4. is it durable?

limitations of SWOT

1. overemphasizes internal strengths and downplays external threats 2. analysis can be static and can risk ignoring changing circumstances 3. can over emphasize a single strength or element of strategy 4. strength is not necessarily a source of competitive advantage

three sources of comparison

1. past performance 2. competitors 3. industry success factors