Spring 2009

Objective of analysing a business is....  to identify its resources and explore how these resources are used to contribute to its competitive advantage.

 Resources  Configuration of resources  The resource audit VRIO !

 The Question of Value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?"Value  The Question of Rarity: "Is control of the resource/capability in the hands of a relative few?"Rarity  The Question of Imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?"Imitability  The Question of Organization: "Is the firm organized, ready, and able to exploit the resource/capability"?Organization

Political, Economical, Social and technological It exposes many of the possible external environmental influences on a business’s performance

 Core activities  Other activities  In the context of a business plan, ask whether some of the planned activities are really core, particularly if investment is required to perform them. Funding is always scarce.  These activities are usually outsourced

 The overlapping of organisational core competencies and core activities comes about because a business should focus on the activities at which it is most competent  i.e. a group of investment bankers setting up a new specialist investment bank maybe excellent bankers, but they may have little knowledge of running an office, or payroll and it systems. They may decide to outsource these non-core activities and concentrate on doing what they are most competent at: the business of investment banking.

If a business’s core activity is closely aligned with its core competencies, these become a factor that enables it to achieve competitive advantage. In contrast, non-core activities cannot leverage core competencies... Next: Configuration of resources