Strategic Management/ Business Policy Power Point Set #4 EMBA 544

Resources and Capabilities Strategy from a resource-based perspective How do resources create competitive advantage? Value-chain analysis The linkage between organizational learning and capabilities

Efficiency Quality Innovation and Growth Ricardian Economics How Do We Use These Different Resources To Create Competitive Advantage? Efficiency Ricardian Economics Quality Qualitative Differences in Resources Innovation and Growth Penrose’s Theory of Firm Growth

How Do Resources Lead to Competitive Advantage? Valuable Does it create “value” for the customer? Rare Do other firms have similar resources? Difficult to Imitate/Substitute Unique Historical Conditions Causal Ambiguity Organization Are you organized to take advantage of your resources?

Using Value Chain Analysis To Determine The Sources of Competitive Advantage Beyond simply using a value chain analysis to “map out” the sequence of activities, we need to ask the following: What is the cost structure of each of these activities? How do we compare with other competitors in each of these areas? What are our strengths and weaknesses? Consider outsourcing weaknesses (e.g., Dell & Boeing)

Value Chain Analysis: Outsourcing activities can have the unintended consequence of damaging the firm’s potential to evaluate continuously its key assumptions, learn, and create new capabilities and core competencies. Therefore, managers should verify that the firm does not outsource activities that stimulate the development of new capabilities and competencies.

Organization and Resources Incentive and Reward Systems Creation of “Knowledge” “Gain-Sharing” Organization Structure Where “Knowledge” Is Located Cross-functional Teams Recruiting and Training Policies Specificity of Knowledge Organization Process The Dynamics of Knowledge Creation

The Challenges of Resource-Based Strategy What resources do we have? Are they fully utilized? How else could we utilize our resources? What resources and capabilities are we going to need in the future? How do we build those resources and capabilities?

Competitive Advantage Through Resources and Capabilities Cost Advantage Technology Manufacturing Organization and Culture Differentiation Advantage Marketing, Sales and Service Brand Name Capital Product Development Organization