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Unformatted text preview: MGO403 FOUNDATION OF STRATEGIC MANAGEMENT
Lecture 3: Resources & Innovation February 13, 2012 Instructor : Akie Iriyama Before Starting Class........ Signup sheet Name plate 2 Schedule
Feb. 15 Wed) Lecture 4: Competitive Strategy Feb. 20 (Mon) HBS Case: Samsung Feb. 22 (Wed) Exercise 2
3 4 5 6 Internal Resources 7 Strategic Fit
Competitive Advantage Strategy External Environments Vision & Mission Internal Resources 8 Key Point (1) Barney's (1991) Resource Based Theory (1) When a firm possesses resources which are valuable, rare, and in-imitable, it would attain the competitive advantage. Valuable Rare
Value Creation Sustainability CA In-imitable Organization
9 Barney's (1991) Resource Based Theory (2)
A firm posses a valuable resource when it enables the firm to exploit external opportunities or neutralize external threats. Fit firm posses a rare resource when many competing firms do not possess it. firm posses an inimitable resource when other firms face a cost disadvantage in obtaining or developing it.
10 A A Types of Resources
Resource Physical Financial Technological Human Organizational Main Characteristics -Size, location, land and building - Borrowing capacity Key indicators - Resale value of fixed assets - Debt/equity ratio - Credit rating - Stock of technology - Number of patents - Research facilities - R&D/sales ratio - Employee skills or talents - Employee qualification - Organization culture - Brand recognition - Reputation - Turnover-rate
11 Which are Rare and/or Inimitable?
Physical Financial Technological Human Organizational Rare and/or In-Imitable? No No Yes Yes Yes
12 Key Point (2) Tangible vs. Intangible Resources Tangible resources are physical entities, such as land, buildings, plant, equipment and money. resources are non-physical entities that are created by managers and other employees, such as brand names, the reputation of the company, the knowledge that employees have gained through experience, and the intellectual property of the company, including that protected through patents, copy rights, and trademarks. to measure them?
13 Intangible How Quiz 1 Which, between the two, received more patents in 2011? (1) Apple (2) SONY 14 Quiz 2 Which, between the two, ranks higher in Interbrand's 2011 Global Brand Ranking? (1) Apple (2) SONY 15 Quiz 3 Which process most accounts for $190 value-added of i-pod? $19 $2 $4 $80 $75
16 (1) Production of HDD (2) CPU (3) Video Processor (4) Design (5) Distribution & Retail Key Point (3) McKinsey's Value-Chain Analysis
value chain refers to the idea that a firm is a chain of activities (steps) for transforming inputs into outputs that customers value. Value chain is very value. useful for identifying a company's resources Technology Sales &
Design Production Distribution Marketing Service The Development Smile Curve Key Point (4) How to make your resource in-imitable? Causal Ambiguity and/or Complexity - Make resources more complex Activity System Uniqueness - In-imitable resources are typically obtained through accumulation. (Dierickx & Cool, 1989) First mover advantage Path dependence
18 Historical Video Content Audio Content 99cent Per single model PodCast Apple Advertising MacWeek Genius Bar iTunes Culturally Current Content Portal Proprietary Platform & Intuitive Interface Visual Language Cool Brand High Impact Marketing Apple Stores Lowcost Outsourcing Exclusive 3rd Party Peripheral & Accessories
Product Playground OsX
Mac Computers WellDesigned Products & Technology iTouch Portable Speakers Nike+ Car Decks
19 iPod Nano ipod Holders Fraser (2009) Key Points VRI Framework vs. Intangible Resources Tangible Value Chain Analysis System Activity 20 How to Create Intangible Resources? Innovation 21 Definition of Innovation (1) "A new combination of exiting elements resulting in a new good, of a new quality of good, the introduction of a new methods of production, the conquest of a new source of supply of raw materials or half manufactured goods....." (Schumpeter, 1934)
22 Definition of Innovation (2) "Innovation is an interactive process initiated by the perception of a new market/or new service opportunity for a technology-based invention which leads to the development, production and marketing tasks striving for the commercial success of this invention (OECD, 1994)
23 Examples of Horrible Inventions 24 25 26 27 Definition of Innovation (1) "A new combination of existing elements resulting in a new good, of a new quality of good, the introduction of a new methods of production, the conquest of a new source of supply of raw materials or half manufactured goods....." (Schumpeter, 1934)
28 Key Point (5) Resource & Capability Resources: Tangible and intangible assets that a firm controls. Ability to configure, combine, and exploit resources Capability: 29 30 Key Point (5) Knowledge Diversification Knowledge diversity raises the likelihood of producing breakthrough innovations (Rosenkopf & Nerkar, 2001; Ahuja & Lampert, 2001). 31 How to diversify Knowledge?
(1) Shuffling Human Resource Job-rotation, Turn-over (2) Organizational Structure GE Flat organization, Boundary-less behavior (3) Facilitate employees' creativity Google, 3M 20(15)% rule (4) External knowledge collaborations Strategic alliances
32 33 Exploration & Exploitation Exploration: Firms' behaviors to search and discover new opportunities and resources to gain future returns Firms' behaviors to use the currently available opportunities resources to gain the present return Exploitation: Competency Trap: In general, as a firm experiences successes, exploitation tends to dominate exploration in the firm. 34 35 36 Technology Development Design Production Distribution Sales & Marketing Service Key Points Capability vs. Resources Diversity Trap Knowledge Competency 38 ...
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- Spring '12