chapter 3

casual ambiguity

impossible to explain what caused a resource to exist or how to recreate it

competitive advantage

A firm's resources and capabilities that enables it to overcome the competitive forces in its industries.

value chain analysis

A strategic analysis of an organization that uses value creating activities

Technological development (support)

Activities completed to improve a firm's products and the processes used to manufacture it. is related to a wide range of activities: Effective R&D activities for process and product initiatives Collaborative relationships between R&D and other departments State of the art facilities and equipment Excellent professional qualifications of personnel

marketing and sales (primary)

Activities include advertising and promotions, negotiation with distribution channels, and training your sales force. activities involve purchases of products and services by end users and includes how to induce buyers to make those purchases: Advertising Promotion Sales force management Pricing and price quoting Channel selection Channel relations

human resources (support)

Activities involved with recruiting, hiring, training, developing, and compensating all personnel It supports both individual primary and support activities (e.g., hiring of engineers and scientists) and the entire value chain (e.g., negotiations with labor unions).

operations (primary)

Activities necessary to convert the inputs provided by inbound logistics into final products. Examples: machining, packaging, assembly, and equipment maintenance

procurement (support)

Activities related to the function of purchasing inputs used in the firm's value chain, not to the purchased input themselves. Examples: qualifying new suppliers, purchasing in different ways from different groups

general administration (support)

Activities such as general management, planning, finance, accounting, legal services, and governmental relations. involves: Effective planning systems to attain overall goals & objectives Excellent relations with diverse stakeholder groups Effective information technology to coordinate & integrate value-creating activities across the value chain Ability of top management to anticipate & act on key environmental trends & events, create strong values, culture & reputation

organizational capabilities

Competencies/skills that a firm employs to transform inputs into outputs; Capacity to combine tangible and intangible resources to attain desired ends or run specific tasks

human innovation and creativity reputation

Define the following intangible resources: ______: experience and capability of employees, trust and collaboration _______: technical and scientific expertise _____: brand name, reputation with suppliers/customers

financial assets organizational resources technological resources physical assets

Define the following tangible resources: ______: cash & cash equivalents, borrowing capacity, capacity to raise equity _____: effective planning processes & control systems ________: trade secrets, patents, copyrights, trademarks, innovative production processes ______: plant & facilities, location, machinery & equipment

outbound logistics

Electronic data interchange (EDI) for Campbell Soup is an example of what primary activity because it has forged close links with their customers to both forecast future demands as well as determine what products require replenishment

organizational capabilities

Enable a firm to take full advantage of other resources it controls. EX: Outstanding customer service (Ex. zappos) Excellent product development capabilities Ability to hire, motivate, and retain human capital Marketing skills Cooperative relationships

External: what a firm might do Focus: - general environment - industry environment AKA: - opportunities and threats Key tools: - five forces analysis Internal: What a firm can do Focus: - resources and capabilities AKA: strengths and weaknesses Key tools: - Resource based View (RBV) - Value chain analysis

External Perspective VS Internal Perspective... Fill in the blank: External Perspective: - Key question: ____ - Focus: ____ - AKA: _____ - Key tools: _____ Internal Perspective: - Key question: ____ - Focus: ____ - AKA: _____ - Key tools: _____

c

Gillette combines several technologies to attain unparalleled success in the wet shaving industry. This is an example of their A. tangible resources B. intangible resources C. organizational capabilities D.strong primary activities

B

In assessing its primary activities, an airline would examine: A. Employee training programs B. baggage handling C. Criteria for lease versus purchase decisions D. the effectiveness of its lobbying activities

interrelationships

Managers must not ignore the importance of _____ among value chain activities

resource based view

Perspective that firms competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute

net income / sales X sales / assets X assets / equity

ROE ratio

Tangible resources Intangible resources

What are the two types of firm resources?

resources and capabilities

_____ are the building blocks of competitive advantage

balanced score card

a method of evaluating a firms performance using performance measures form the customer, internal, innovation and learning and financial perspectives. Provides top managers with a fast but comprehensive view of the business

outbound logistics (primary)

activities involved with collecting, storing, and physically distributing the final product to clients (B2B or B2C) Examples: finished-goods warehousing and shipping, delivery vehicle operation, oder processing , scheduling and distribution

central theme of resource based view

competitive advantages are created and sustained through the bundling of several of these resources to unique combinations

primary activities

firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain

support activities

firm activities that add value indirectly, but are necessary to sustain primary activities

path dependency

hard to duplicate because of all that has happened along the path followed in the development and/or accumulation of resources

- If they are valuable, rare, hard to duplicate - If tangible resources, intangible resources, & organizational capabilities are combined

how can resources lead to a competitive advantage? (2 ways)

service (primary)

includes all actions associated with providing service to enhance or maintain the value of the product: Installation Repair training Parts supply Product adjustment Activities designed to enhance or maintain a product's value.

inbound logistics (primary)

is primarily associated with receiving, storing and distributing inputs to the product: Activities, such as material handling, warehousing, and inventory control, used to receive, store, and disseminate inputs to products

value

is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue

net income / sales

profit margin ratio

physical uniqueness

resources that are physically unique, therefore impossible to duplicate

social complexity

resources that result from social engineering such as interpersonal relations, culture

net income / total assets

return on asset ratio

net income / total equity

return on equity ratio

financial ratios

the following are types of _______: 1. Short Term solvency or liquidity 2. Long term solvency measures 3. Asset Management (or turnover) 4. Profitability measures 5. Market Value

limitations of SWOT

the following describe _____: -Strengths may not lead to an advantage -SWOT's focus on the external environment is too simplistic -SWOT gives a one shot view of a moving target -SWOT analysis has much to offer, but only as a starting point. By itself, it rarely helps a firm develop competitive advantages that it can sustain over time

1. An internal analysis of phenomena within a company 2. An external analysis of the industry & its competitive environment

the resource based view of the firm integrates what two activities?

Is the resource valuable? IS the resource rare? can the resource be imitated easily? are substitutes readily available?

what are the 4 key attributes of resources?

1. inbound 2. operations 3. outbound 4. marketing and sales 5. service

what are the 5 primary activities?

physical uniqueness path dependency casual ambiguity social complexity

what are the four sources of inimitability?

1 procurement 2. technological development 3. human resources 4. general admission

what are the four support activities?

-financial ratio analysis - stake holder perspective (the balanced scorecard)

what are two ways toe evaluate firm performance?

Obvious threats

what does the following describe about the worlds logistics systems? The increased costs due to higher oil prices are obvious Costs resulting from increased congestion on roadways, which lead to higher fuel consumption to idle factories awaiting deliveries of raw materials, is less obvious What can companies do to counteract some of the logistics problems mentioned

support activities primary activities

what does the value chain make up? (2)

Creating value for buyers that exceeds the costs of production

what is a key concept used in analyzing a firm's competitive position?

is the resource rare?

which of the Four key attributes of resources: Common strategies based on similar resources give no firm an advantage Competitive advantages are gained only from uncommon resources

1. Is the resource valuable?

which of the Four key attributes of resources: Enables a firm to formulate and implement strategies that improve its efficiency or effectiveness Link to 5 forces: Valuable resources exploit opportunities and/or neutralize threats

can the resource be imitated easily?

which of the Four key attributes of resources: Physical uniqueness (a beautiful resort) Path dependency (first mover advantage) Causal ambiguity Social complexity (org. relationships & culture)

are substitutes readily available?

which of the Four key attributes of resources: Similar resource(s) Strategic substitutes

tangible resources

which resources are assets that are relatively easy to identify such as: physical assets, financial assets, technological resources, organizational resources

intangible resources

which resources are embedded in unique routines and practices such as human, innovation and creativity, and reputation