1. CE 726 STRATEGIC CAPABILITY

2. ASSESSMENT OF STRATEGIC CAPABILITY

3. DETERMINATION OF STRATEGIC CAPABILITY : ”Resources and Competences” STRATEGY DEVELOPMENT IS CONCERNED WITH CHANGING STRATEGIC CAPABILITY BETTER TO FIT A CHANGING ENVIRONMENT. STRATEGY DEVELOPMENT IS CONCERNED WITH CREATION OF NEW OPPORTUNITIES BY STRETCHING AND EXPLOITING THE STRATEGIC CAPABILITY.

4. STRATEGIC CAPABILITY STRATEGIC CAPABILITY IS ABOUT THE ABILITY TO PROVIDE PRODUCTS/ SERVICES WITH FEATURES THAT ARE VALUED BY THE CUSTOMERS. STRATEGIC CAPABILITY STARTS WITH THE RESOURCES. RESOURCES ARE IMPORTANT BECAUSE THEY NEED TO BE DEPLOYED INTO THE ACTIVITIES THAT AN ORGANISATION UNDERTAKES TO CREATE COMPETENCES.

5. TO TEST THE STRATEGIC CAPABILITY; WHAT ARE OUR RESOURCES ? WHAT MAKES US DIFFERENT THAN OUR COMPETITORS? AT WHICH ACTIVITIES WE ARE MOST SUCCESSFUL? (STRENGTHS) WHAT ARE THE REASONS OF FAILURE/ LOW COMPETITIVE ADVANTAGE? (WEAKNESSES)

6. WHAT ARE THE SOURCES OF STRATEGIC CAPABILITY ? THE DIFFERENCES IN PERFORMANCE BETWEEN THE ORGANISATIONS IN THE SAME MARKET IS RARELY EXPLAINABLE BY DIFFERENCES IN THEIR RESOURCE BASE SINCE RESOURCES CAN USUALLY BE IMITATED OR TRADED. SUPERIOR PERFORMANCE IS DETERMINED BY THE WAY IN WHICH RESOURCES ARE DEPLOYED TO CREATE COMPETENCIES IN THE ORGANISATION’S ABILITIES.

7. TYPES OF RESOURCES PHYSICAL RESOURCES HUMAN RESOURCES FINANCIAL RESOURCES INTELLECTUAL CAPITAL (INTANGIBLE RESOURCES)

9. RESOURCES IF ORGANISATIONS ARE TO SURVIVE, THEY MUST BE COMPETENT TO PROVIDE THE PRODUCT FEATURES REQUIRED BY CUSTOMERS AT THE THRESHOLD LEVEL. IF THEY ARE TO OUTPERFORM COMPETITORS, THEY MUST HAVE UNIQUE RESOURCES AND COMPETENCES.

10. What is core competency? IT MUST RELATE TO AN ACTIVITY OR PROCESS THAT FUNDAMENTALLY UNDERPINS THE VALUE IN THE PRODUCT/SERVICE (AS SEEN THROUGH THE EYES OF CUSTOMER) BETTER THAN COMPETITORS IT SHOULD BE ROBUST (DIFFICULT TO IMITATE)

11. ABOUT PORTER’S VALUE CHAIN ANALYSIS DIFFERENCES BETWEEN VALUE CHAINS ARE A KEY SOURCE OF COMPETITIVE ADVANTAGE BETWEEN THE COMPETITORS VALUE: WHAT A COMPANY CREATES IS MEASURED BY THE AMOUNT BUYERS ARE WILLING TO PAY FOR A PRODUCT OR SERVICE. DIFFERENCE BETWEEN VALUE AND COST DETERMINES A COMPANY’S PROFITABILITY. COMPETITIVENESS STEMS FROM LOWER COSTS OR HIGHER VALUE

12. HOW TO CREATE VALUE? COMPETENCE IN SEPARATE ACTIVITIES (PRIMARY ACTIVITIES) COMPETENCE IN LINKING ACTIVITIES TOGETHER (SUPPORT ACTIVITES) PRIMARY ACTIVITIES ARE DIRECTLY CONCERNED WITH THE CREATION OR DELIVERY OF A PRODUCT OR SERVICE. SUPPORT ACTIVITIES HELP TO IMPROVE THE EFFECTIVENESS OF PRIMARY ACTIVITIES.

13. VALUE CHAIN DESCRIBES THE ACTIVITIES WITHIN AND AROUND AN ORGANISATION WHICH TOGETHER CREATE A PRODUCT/SERVICE.

14. PRIMARY ACTIVITIES (DIRECTLY CONCERNED WITH THE CREATION OR DELIVERY OF A SERVICE OR PRODUCT): INBOUND LOGISTICS: ACTIVITIES CONCERNED WITH RECEIVING, STORING, AND DISTRIBUTING THE INPUTS TO THE PRODUCT OR SERVICE.(MATERIALS HANDLING, STOCK CONTROL ETC.) OPERATIONS: TRANSFORM VARIOUS INPUTS INTO FINAL PRODUCT/SERVICE. OUTBOUND LOGISTICS: COLLECT, STORE, AND DISTRIBUTE THE PRODUCT TO CUSTOMERS. MARKETING AND SALES: PROVIDE THE MEANS WHEREBY USERS ARE MADE AWARE OF THE PRODUCT AND ARE ABLE TO PURCHASE IT. SERVICE: INCLUDES ALL ACTIVITIES WHICH ENHANCE OR MAINTAIN THE VALUE OF THE PRODUCT SUCH AS REPAIR, TRAINING, SPARES ETC.

15. SUPPORT ACTIVITIES (HELP TO IMPROVE EFFICIENCY OF PRIMARY ACTIVITIES): PROCUREMENT: PROCESSES FOR ACQUIRING THE VARIOUS RESOURCE INPUTS TO THE PRIMARY ACTIVITIES. TECHNOLOGY DEVELOPMENT: ALL VALUE ACTIVITIES HAVE A ‘TECHNOLOGY’. HUMAN RESOURCE MANAGEMENT: CONCERNED WITH RECRUITING, MANAGING, TRAINING, DEVELOPING, AND REWARDING PEOPLE. INFRASTRUCTURE: SYSTEMS OF PLANNING, FINANCE, QUALITY, INFORMATION MANAGEMENT. IT CONSISTS OF STRUCTURES AND ROUTINES OF THE ORGANISATION WHICH SUSTAIN ITS CULTURE.

16. VALUE ADDED BY A CONTRACTOR INPUTS: RAW MATERIALS EQUIPMENT LABOUR … CONTRACTOR’S RESOURCES: EXPERIENCE IN CONSTRUCTION ABILITY TO PROCURE AND MANAGE RESOURCES CONTACTS (SUBCONTRACTORS ETC.) … OUTPUT: CONSTRUCTED FACILITY Organisation adds its value here

17. VALUE CHAIN IN CONSTRUCTION FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT INBOUND LOGISTICS CONSTRUCTION OUTBOUND LOGISTICS MARKETING AND SALES SERVICE SUPPORT ACTIVITIES : PROJECT MANAGEMENT, CONTRACT MANAGEMENT ETC. SUBCONTRACTORS, EQUIPMENT PARK ETC. BUSINESS DEV., BID PREPARATION ETC..

18. VALUE CHAIN: BID PREPARATION SUBCONTRACTORS’ OFFERS COST OF INPUTS (MATERIAL, LABOUR ETC.) DATA COLLECTION ACTIVITIES DIRECT COST ESTIMATION INDIRECT COST ESTIMATION TIME-COST DATA SITE EXPENSES OVERHEAD PLANNING ACTIVITIES IDENTIFICATION OF RISK PREMIUM IDENTIFICATION OF PROFITABILITY RATIO BID PREPARATION REFINING THE BID CONSIDERING COMPETITIVENESS

19. VALUE CREATION VALUE CREATION BY PRIMARY ACTIVITIES VALUE CREATION BY SUPPORT ACTIVITES VALUE CREATION BY RELATIONS VALUE CREATION BY COMBINING BUSINESSES

20. VALUE SYSTEM IS THE SET OF INTER-ORGANISATIONAL LINKS AND RELATIONSHIPS WHICH ARE NECESSARY TO CREATE A PRODUCT OR SERVICE

21. VALUE CREATION BY COMBINING BUSINESSES QUARRYINGCONCRETE MIX ASPHALT PLANT CONSTRUCTION STEEL FABRICATION WASTE MANAGEMENT COMPANY Landfill AggregateMaterials Waste INTEGRATED STRUCTURE

22. INTERNAL APPRAISAL CORPORATE TRADING PERFORMANCE: REVIEW OF FINANCIAL PERFORMANCE (BALANCE SHEET INFORMATION) PERFORMANCE INDICATORS : BID SUCCESS RATIO ETC. CURRENT SERVICES AND PRODUCTS: TRACING ORIGINS OF COST AND PROFIT ORGANISATIONAL ANALYSIS: IDENTIFICATION OF AREAS OF SKILL COMPANY POSITION IN MARKETS CONTROL SYSTEMS ASSETS-RESOURCES POLICIES/STRATEGIES

23. QUESTIONNAIRE FINDINGS (1) STRENGTHS/WEAKNESSESMEANSTD. DEV. FINANCIAL RESOURCES/CREDIBILITY4.220.88 TECHNICAL CAPABILITY4.000.76 MANAGERIAL CAPABILITY3.650.71 ORGANISATIONAL STRUCTURE3.380.78 LOW COST CONSTRUCTION3.570.95 QUALITY OF WORK AND SERVICES4.200.66 HUMAN RESOURCES3.500.85 GOOD MARKETING3.320.81 IT DEVELOPMENTS3.680.79 COMPANY IMAGE4.320.77 INNOVATION IN SERVICES3.380.74 EXPERIENCE/KNOWLEDGE4.330.75 RESEARCH AND DEVELOPMENT2.370.86 CLIENT RELATIONS4.070.78 RELATIONS WITH COMPETITORS3.650.73

24. COST INCREASE DUE TO PRIMARY ACTIVITIES : 60% COST INCREASE DUE TO SUPPORT ACTIVITIES: 40% COST OF POOR QUALITY (REWORK) = 3 COST OF POOR PLANNING (DELAY) = 2 COST OF POOR CONTRACT MANAGEMENT (CLAIMS)= 2 COST OF POOR INFORMATION FLOW = 2 COST OF POOR SELECTION OF RESOURCES = 2 Where 1: negligible, 2: considerable, 3: significant QUESTIONNAIRE FINDINGS (2)

25. QUESTIONNAIRE FINDINGS: SOURCES OF COMPETITIVE ADVANTAGE IN TURKISH CONSTRUCTION INDUSTRY CRITERIAMEAN VALUESTD. DEV. COST-TIME4.330.9 QUALITY3.470.95 CLIENT RELATIONS4.330.73 FINANCIAL CAPABILITY4.000.71 TECHNICAL COMPETENCY 3.780.9 MANAGERIAL COMPETENCY 3.501.03 EXPERIENCE3.800.88 INNOVATION3.131.19 POLITICAL POWER4.470.83