BADM 449 Ch. 4

What are different types of knowledge and levels of knowledge

Types of knowledge: explicit (information, facts, databases), tacit (skills, organizational capabilities) Levels of knowledge: individual vs. organization

Describe the VRIO(N) Framework.

¬ A theoretical framework that explains and predicts firm-level competitive advantage. A firm can gain competitive advantage if it has resources that are: ♣ (V) Valuable: helps to increase the perceived value of its products or service in the eyes of the customer ♣ (R) Rare: if only one or a few firms possess the resource or can perform the capability in the same or unique way ♣ (I) Costly to Imitate: If firms do not possess the resource are unable to develop or buy the resource at a reasonable price ♣ (O) The firm must Organize to capture the value of the resources: must have in place an effective organizational structure and coordinating systems.

How is the Activity System Model related to the Value Chain Model? Apply to the Wal-Mart case.

¬ Activities show the business processes that enable firms to add incremental value by transforming inputs into goods and services ¬ A network of interconnected activate sin the firm ¬ Evolve over time as the external environment changes (add new activities & upgrade or remove obsolete ones) ¬ Ex. from Wal-Mart: IT investment, Everyday low prices, broad assortment of goods, customer services

How can a firm gain and protect a competitive advantage?

¬ Better Expectations of Future Values: buy resources at a low cost ¬ Path Dependence: current alternatives are limited by past decisions ¬ Casual Ambiguity: cause of success or failure are not apparent ¬ Social Complexity: two or more systems interact creating many possibilities

What are some elements of Strategic Coherence?

¬ Combining activities that complement and reinforce one another to achieve the overall objectives of the firm ¬ Sustainable competitive advantage often requires tradeoffs

What is meant by "core competencies" and "strategic fit"

¬ Core Competencies: Unique strengths embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services. ¬ Strategic Fit: internal strengths change with the external environment

Provide some company examples of core competencies

¬ Google: developing proprietary search algorithms ¬ Nike: Designing and marketing innovative athletic shoes and apparel ¬ UPS: Providing superior supply chain management services at low cost

If VRIO(N) is the answer, what is the question?

¬ How to get sustained competitive advantage?

How are resources measured? What were some examples from the Wal-Mart case?

¬ How useful the resources are in adding to the core competencies ♣ Ex. from Wal-Mart: huge fleet of trucks for distribution, huge stores, lots of warehouses, IT innovations

What can be an unintended consequences of outsourcing?

¬ Outsourcing activities can have the unintended consequence of damaging the firm's potential to evaluate continuously its key assumptions, learn, and create new capabilities and core competencies. Therefore, managers should verify that the firm does not outsource activities that stimulate the development of new capabilities and competencies

What is meant by Positioning? Provide examples from our Wal-Mart case.

¬ Positioning: Strategic positions need to change over time ♣ Aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer. ¬ Walmart Case: Want to position self as lowest prices compared to other discount stores, with cheerful people compared to other discount stores

What are the primary and support activities of the value chain?

¬ Primary Activities: Add value directly in transforming inputs into outputs ♣ Raw materials through production to customers ¬ Support Activities: Indirectly add value ♣ Provide support to the primary activities ♣ Information systems, human resources, accounting, etc. ¬ Managers can see how competitive advantage flows from a system of activities

What is the difference between a product focus and a resource-based focus, and why might it matter for strategy?

¬ Product Focus: describe firm's position in the industry as a leader in either cost or differentiation ¬ Resource based view: emphasizes that firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. ♣ Model sees resources as key to superior advantage. • Two types of resources: tangible and intangible • Competitive advantage more likely from intangible resources

What are the elements of a SWOT analysis?

¬ SWOT Analysis: Framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weaknesses (S and W) with those from an analysis of external opportunities and threats (O and T) to derive strategic implications

Describe the strategic coherence (activity system) model of Southwestern Airlines

¬ Southwest Airlines ♣ Low Price, Short Routes, No Frills, Point-to-Point, One Aircraft -- Boeing 737, High number of Aircraft per Route, No Meals, Flexible/ Lower Staffing

What are key elements of Organization?

¬ Structure: Formal definition of authority, Conflict resolution ¬ Systems: Rules, routines, evaluation and rewards ¬ Processes: Informal communication, networks, and recruitment

What are different types of resources and capabilities? And definition of resources and capabilities

¬ Tangible resources: e.g., physical capital ¬ Organizational capabilities: e.g., routines and standard operating procedures ¬ Intangible resources: e.g., trademarks, "know-how" ¬ RESOURCES: any assets that a firm can draw on when formulating and implementing a strategy ¬ CAPABILTIES: Organizational and managerial skills necessary to orchestrate a divers set of resources and deploy them strategically

Provide examples of tangible and intangible resources, and what are the implications of each for sustainable competitive advantage

¬ Tangible: Physical attributes, visible ♣ Ex. Capital, land, buildings, plant, equipment, supplies ¬ Intangible: no physical attributes, invisible ♣ Ex. Cultures, knowledge, brand equity, reputation, intellectual property (patents, copyrights) - Competitive advantage is more likely to be based on intangible resources

What determines the earning potential of resources and capabilities?

¬ Their abilities to establish a competitive advantage ¬ To sustain that competitive advantage ¬ To appropriate the returns to that competitive advantage

How can value chain analysis and benchmarking determine core competencies?

¬ They are two analytical tools useful in determining whether a company's prices and costs are competitive

What are two critical assumptions of the Resource-Based View (RBV)?

¬ Two critical assumptions of RBV ♣ Resource Heterogeneity: firm is a bundle of resources and capabilities that differ across firms • Ex. Southwest airlines and Alaska Airlines have ♣ Resource Immobility: Assumption in the resource-based view that a firm has resources that tend to be "sticky" and that do not move easily from firm to firm • Ex. Southwest Airlines has sustained advantage b/c several decades of superior performance and competitors have unsuccessfully imitated their model ¬ Therefore, resource differences that exist between firms are difficult to replicate and, because of this, can last for a long time.

MAIN POINTS:

• Definitions of resources, capabilities, activities and core competencies • Assumptions behind resource based view: resource heterogeneity and resource immobility • VIRO framework to assess firm's resources • Value Chain Analysis describes the internal activities a firm engages in when transforming inputs into outputs to generate differentiation and drive costs • SWOT Analysis to generate insights from external and internal analysis and derive strategic implications which helps firm leverage its internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats