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| a corporation's ability to exploit its resources |
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| A cross-functional integration and coordination of capabilities (such as using R&D, marketing, and MIS for a product) |
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| Collection of competencies that crosses divisional boundaries, is widespread within corporation, and is something that the corporation does exceedingly well. |
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| when a core competency is superior to those of the competition |
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proposes 4 questions to evaluate a firm's competencies
-Value: Does it provide customer value and comp. adv.?
-Rareness: Do no other competitors possess it?
-Imitability: Is it costly for others to imitate it?
-Organization: Is the firm organized to exploit the resource? |
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| 5 step resource based approach to strategy analysis |
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Definition
1.Identify/classify firm's resources in terms of strengths/weaknesses
2.combine firm's strengths into specific capabilities and core competencies
3.Appraise the profit potential of these capabilities and competencies in terms of their potential for sustainable comp. adv. and ability to harvest the profits resulting from there use.
4.Select the strategy that best exploits the firms capabilities and competencies relative to external opportunities.
5.Identify resource gaps and invest in upgrading weaknesses |
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| Corp. gains access to a distinctive competency in 4 ways |
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Definition
1.Asset endowment, such as a key patent
2.Acquired from someone else through acquisition
3.may be shared with another business unit or alliance partner
4.may be carefully built and accumulated over time within companies |
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| rate at which a firm's underlying resources, capabilities, or core competencies depreciate or become obsolete. |
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| rate at which a firm's underlying resources, capabilities, or core competencies can be duplicated by others. |
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| speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm's strategy |
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| Ability of competitors to gather the resources and capabilities necessary to suport a competitive challenge. |
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| Ability of competitors to use duplicated resources and capabilities to imitate the other firm's success. |
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| Explicit vs. Tacit knowledge |
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Definition
Explicit-easily articulated/communicated (easy to identify)
Tacit-deeply rooted in employee experience or in corporate culture |
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| continuum of sustainability |
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Definition
(High to Low)
-Slow-cycle resource (strongly shielded, patents, brand name)
-Standard-cycle Resources (standardized mass production, economies of sale, complicated processes)
-Fast-cycle resources (Easily duplicated, idea driven) |
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| company's method for making money in the current business environment. |
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| consulting model, IBM sells expertise |
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| Get customers to buy in at low-price/low-margin entry and move up to high-price/high-margin products |
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| Multi-component system/installed base model |
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Definition
| Gillette invented to sell razors at break-even in order to make money on higher-margin razors |
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| offers basic product free in order to make money on advertising.Google |
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| firm acts as intermediary to connect multiple buyers/sellers. ebay/amazon |
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| product r/d and speed. Being first to market a new innovation allos for high margin earnings, when others enter, move on. |
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| company waits until a product becomes standardized then enters market with a low-priced, low margin product that appeals to the mass market. Wal-mart |
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| Focus is on high investment into a few products with high potential payoffs-especially if protected by patents |
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| develop a concept that may or not make money on its own but, through synergy, can spinn off many profitable products. Walt disney (used characters to develop theme parks/merchandise) |
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| Company offers specialized products/services to market niches that are too small to be worthwhile to large competitors but have potential to grow quickly. |
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| De Facto industry standard model |
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Definition
| Offers products free or at low price to saturate market and become standard. Then offer high-margin products using the standard. |
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| set of value-creating activities that begin with basic raw materials coming from supplier, moving on to a series of value-added activities involved in producing and marketing a product or service, and ending with distributors getting the final goods into the hands of the ultimate consumer |
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| raw materials>primary manufacturing>fabrication>distributor>retailer |
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| ex: Oil, upstream refers to oil exploration, drilling, and moving crude to refinery |
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| ex:In Oil, refers to refining the oil plus transporting and marketing gasoline and refined oil to distributors and gas station retailers. |
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Term
| Company Center of Gravity |
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Definition
| part of the chain that is most important to the company. where greatest expertise/capabilities lie (core competencies) |
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| primary activities (manuf. firm) |
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Definition
-inbound logistics (raw mat. handling/warehousing)
-Operations (machining, assembling, testing)
-Outbound Logistics (warehousing+distribution of finished product)
-Marketing and sales
-Service (Installation, repair, parts) |
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| Support Activities (manuf. firm) |
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Definition
Ensure primary activities operate efficiently
-Procurement (purchasing of supplies)
-Tech Development (R&D, product+process develop.)
-Human Resource Mgmt (recruiting, training, develop.)
-Firm Infrastructure (general mgmt, accounting, finance, strategic planning) |
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| Result when the value chains of two separate products or services share activities, such as same marketing channels or manufacturing facilities. |
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| no functional or product categories and is appropriate for small companies with few product lines (stage 1) |
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| medium sized firm, several products, one industry. Employees are specialists in important business functions (manuf., marketing, finance, etc.) |
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| Large corps, many products, several related industries. Employees are functional specialists. |
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| Strategic Business Units (SBU) |
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| Any size or level, organized into BUs composed of independent product-market segments that are given responsibility over mgmt of own group. must have 1)unique mission, 2)identifiable competitors, 3)an external market focus, and 4)control of its business functions |
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| appropriate for large corp. Varient of divisional. Assemblage of legally independent firms (subsidiaries) under one corporate umbrella. |
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| Corporate Culture functions (4) |
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Definition
1. convey sense of identity for employees
2. Help generate emp. commitment to something greater
3. Add to stability of the org. as a social system
4. Serves as a frame of reference for employees to use to make sense of org. activites and use as a guide for appropriate behavior |
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| Who are our customers? specific marketing concentration. |
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| divide market into segments to focus on |
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| Product, Place, Price, Promotion |
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| Sales over time. Introduction, Growth, Maturity, Decline |
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| stakeholder's perceptions of a corporations ability to produce quality goods and a corporations prominence in the minds of stakeholders. |
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ratio of total debt to total assets, helpful in describing how debt is being used to increase earnings available to shareholders
-high lvg increases EPS, less taxable income, but fewer shareholders share profits. |
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| analyzing and ranking of possible investments in fixed assets (land, buildings, equipment) |
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| Principal means of gaining market share.spending on R&D as a percentage of sales revenue |
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| A corp's proficiency in managing research personnel and integrating their innovation into it's operations |
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| tech from lab to marketplace |
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