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Unformatted text preview: Analyzing the Firm
Analyzing the Firm
Rod Thirion Strengths
Are resources and capabilities that allow the firm to complete important tasks.
Another way of saying…
Something a firm does well or an attribute that enhances its competitiveness Examples of Strengths
Examples of Strengths Patents Strong brand names Good reputation among customers Cost advantages from proprietary know how Exclusive access to high grade natural resources Favorable access to distribution networks Weaknesses
A company’s resource and capability deficiencies that make it difficult for the firm to complete important tasks.
Another way of saying…
A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage. Examples of Weaknesses
Examples of Lack of patent protection A weak brand name Poor reputation among customers High cost structure Lack of access to the best natural resources Lack of access to key distribution channels Resources
Tangible Market share Financial resources Exclusive contracts Patents and trade secrets Operational efficiency Operational capacity Technology Resources
Company culture Company image Position on the experience curve Brand awareness Brand image
The question is: are we creating value for our customers? Can be measured by price they are willing to pay. Capabilities & Company Capabilities & Company Competencies
Come from skills, expertise, and experience (human capital) Accumulation of learning over time
Selecting people with knowledge and skills
Upgrading or expanding individual abilities
Cooperation to create organizational ability
A conscious effort to create intellectual capital Buildup of proficiency in performing an activity Competencies, Core Competencies Competencies, Core Competencies & Distinctive Competencies Competencies are the product of organizational and learning. They represent real proficiency in performing internal activities
Core competencies are wellperformed internal activities critical to a company’s competitiveness and profitability
Distinctive competencies are competitively valuable activities a company performs better than its rivals Value Chain Consists of activities undertaken to design, produce, market, deliver, and support the products or services offered Consists of a linked set of valuecreating activities performed internally Two types of activities: Primary activities – where most of the value for customers is created
Support activities – facilitate performance of the primary activities Value Chain
Value Chain Source: Crafting and Executing Strategy 14th edition, Arthur A. Thompson, et all. McGrawHill Irwin, 2006. Benchmarking
Benchmarking Identify best practices in performing an activity
Understand the best practices in performing
an activity Learn how other firms achieve lower costs
Take action to improve company’s cost competitiveness Benchmarking Questions
How do other companies? How much do they pay?
8. Purchase of materials
Payment of suppliers
Management of inventories
Getting new products to market
Performance of quality control
Filling and shipping of customer orders Training of employees
Processing of payrolls Outsourcing
Acquiring a capability from an external supplier that contributes to creating value for the customer. Or at least that is what is should do.
Real World Example: http://www.youtube.com/watch?v=lKIGzlDRqw Reasons For Outsourcing
Reasons For Outsourcing
9. Improve Company Focus Access to WorldClass Capabilities Accelerate Reengineering Benefits Share Risks Free Resources for Other Purposes Make Capital Funds Available Reduce and Control Operating Costs Resources Not Available Internally Function Difficult to Manage or Out of Control Competitive Advantage Competitive Advantage
“What business strategy is all about; what distinguishes it from all other kinds of business planning is, in a word, competitive advantage. Without competitors there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as effectively as possible, a sustainable edge over its competitors.” Keniche Ohnae ...
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- Spring '11