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J370 Session 5 Internal Analysis: Value Chain & RBV/VRIO o Class Session #5 – Tuesday September 15 o Dr. Siri Terjesen  What Does Internal Analysis Tell Us? o What are the firm’s strengths and weaknesses? o How do these strengths & weaknesses compare to competitors? o Are the resources and capabilities likely sources of competitive advantage? o What strategies can we establish that will exploit any sources of competitive  advantage? External Analyses’ Outcomes o By studying the external environment, firms identify what they should or      might       choose to do   Internal Analyses’ Outcomes  o By studying the internal environment, firms identify what they  can do The Resource-Based View o Answers the Q: Why do some firms achieve better economic performance than  others? o Firm is a bundle of resources  o Assumption: a firm’s resources and capabilities are the primary drivers of  competitive advantage and economic performance o E.g. Strategists who are better at identifying and creating changes in the world  around them, and adjusting resource mix, are more likely to perform better  The Resource-Based View o Resources: tangible and intangible assets of a firm » tangible: factories; intangible: reputation used to conceive of and  implement strategies o Four Categories of Resources Financial (cash, retained earnings) Physical (plant & equipment, geographic location) Human (skills & abilities of individuals) Organizational  (reporting structures, relationships) The Resource-Based View o Capabilities a subset of resources that enable a firm to take full advantage of other  resources (ability of the firm to use an asset for its gain) marketing skill, cooperative relationships Resources are not productive on their own
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“Core competence”: capabilities fundamental to a firm’s strategy and performance Example: Elite Athletes o Resources: Healthy body, medical facilities, training venues, equipment, food supplements, physiotherapy, diet planning, excellent heart and lungs, height, weight, world-class coach(es) o Capabilities: dedication, tenacity, time to train, demanding levels of competition, will to win Examples of Firms’ Capabilities o Functional Areas Capabilities Distribution Effective use of logistics management techniques Human resources Motivating, empowering, and retaining employees Management Effective and efficient control of inventories
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