1. Strategic Management: Concepts and Cases
Part I: Strategic Management Inputs
Chapter 3: The Internal Organization:
Resources, Capabilities, Core Competencies and Competitive Advantages

2. The Strategic Management Process

3. 海尔集团

4. On 2011, Haier Group global turnover of 150
On 2011, Haier Group global turnover of billion yuan,17 countries in the world with more than employees, Haier users around the world more than 100 countries and regions. In the domain of white home appliance, Haier is the world's leading brand of white goods. Haier Group holds a number of consumer life brand. Which, according to the statistics of Haier brand, has won for three consecutive years the world's largest sales of household appliances brand (data source: Euromonitor International Euromonitor ).

6. In the era of Internet, Haier build open innovation system to support the brand and market development, as of 2011, has declared12318 patents, or 8350 authorized patents; cumulative reported77 international standard proposal, of which 27 have been published and implemented.

7. Haier motto The essence of management is not known, but action
Forever, trembling with fear, always to be very careful attitude
A journey of a thousand miles begins with a single step, the world famous brand in the
Do not discount the quality, the service does not discount, credit.
Capital is a boat, the brand is sail, business is the people, culture is the soul
To seek truth from facts, is to change the mindset problem
Dare to seek truth from facts, is the problem of improving the ideological realm(意识形态)

8. Haier industry White electric products
Digital and personal products group
The whole kitchen
Home appliances

9. Haier products

10. What is the core Competency of Haier?

11. Core competency of Haier
1、Brand value
2、Patents
3、Service
4、Management
5、Culture

12. Components of Internal Analysis Leading to Competitive Advantage and Strategic Competitiveness

13. Analyzing the Internal Organization (IO)
Context of Internal Analysis
Creating Value
The Challenge of Analyzing the IO

14. Analyzing the Internal Organization (IO) (Cont’d)
Context of Internal Analysis
‘Global mind-set’ （全球化观念）
Ability to study an internal environment in ways that do not depend on the assumptions of a single country, culture, or context
Analyze firm’s portfolio（组合） of resources and bundle heterogeneous（不同种类的） resources and capabilities
Understand how to leverage（激活） these bundles
An organization's core competencies creates and sustains its competitive advantage

15. Analyzing the Internal Organization (IO) (Cont’d)
Creating Value
Exploit core competencies or competitive advantage
Value: measured by a product's performance characteristics and by its attributes for which customers are willing to pay

16. Analyzing the Internal Organization (IO) (Cont’d)
The Challenge of Analyzing the IO
Strategic decisions are non-routine（非常规的）, have ethical implications（伦理内涵） and influence the organization’s above-average returns
Involves identifying, developing, deploying（配置） and protecting firms’ resources, capabilities and core competencies
Managers face uncertainty on many fronts --
Proprietary technologies（专利技术）
Changes in economic and political trends, societal values and shifts in customer demands
Environment – increases complexity
Intraorganizational conflict
Due to decisions about core competencies and how to nurture them

17. Conditions Affecting Managerial Decisions About Resources, Capabilities, and Core Competencies

18. Resources, Capabilities and Core Competencies
Competitive Advantage (CA) foundation includes
Resources
Bundles to created organizational capabilities
Tangible and intangible (As seen in Figure 3.1)
Capabilities
Source of a firm’s core competencies and basis for CA
Purposely integrated to achieve a specific task/set of tasks
Core Competencies
Capabilities that serve as a source of CA for a firm over its rivals
Distinguish a company from its competitors – the personality

19. Strategic cooperation between TECENT & SOHU
448 million for
36.5% share

20. Products input method Browser Search Engine
SNS(Social Networking Services)

21. Resources, Capabilities and Core Competencies
Tangible
Assets that can be seen, touched and quantified
Examples include equipment, facilities, distribution centers, formal reporting structures
Four specific types
Intangible
Assets rooted deeply in the firm’s history, accumulated over time
In comparison to ‘tangible’ resources, usually can’t be seen or touched
Examples include knowledge, trusts, organizational routines, capabilities, innovation, brand name, reputation
Three specific types

22. Building Core Competencies: Criteria and Value Chain Analysis
Two tools firms use to identify and build on their core competencies
Four specific criteria of Sustainable CA
Value Chain Analysis

23. Building Core Competencies: Criteria and Value Chain Analysis
Four specific criteria of Sustainable CA
Valuable
Rare
Costly-to-imitate
Nonsubstitutable capabilities
Competitive consequences include
Disadvantage, parity（同等）, temporary advantage and sustainable advantage
Performance implications include returns
Above, below or average

24. Discussion
What kind of resources can contributes to the sustainable advantage? Give an example

25. Building Core Competencies: Criteria and Value Chain Analysis
Value chain activities
Involved with product’s physical creation, sales and distribution to buyers, and service after the sale
Service, marketing/sales, outbound/inbound logistics and operations
Support activities
Provide assistance necessary for the primary activities to take place
Includes firm infrastructure, HRM, technologies development and procurement

26. The Basic Value Chain

27. Outsourcing
Definition: Purchase of a value-creating activity from an external supplier
Effective execution includes an increase in flexibility, risk mitigation and capital investment reduction
Trend continues at a rapid pace
Firms must outsource activities where they cannot create value or are at a substantial disadvantage compared to competitors
Can cause concerns
Usually revolves around innovative ability and loss of jobs

28. The advantages and disadvantages of outsouring?
Discussion
The advantages and disadvantages of outsouring?

29. Competencies, Strengths, Weaknesses and Strategic Decisions
Firms must identify their strengths and weaknesses
Appropriate resources and capabilities needed to develop desired strategy and create value for customers/other stakeholders
Tools (I.e., outsourcing) can help a firm focus on core competencies as the source for CA
Core competencies have potential to become core rigidities(僵化)
Competencies emphasized when no longer competitively relevant can become a weakness
External environmental conditions and events impact a firm’s core competencies

30. Task 1/ read the book p81 : Value Chain Analysis P97-99
2/ prepare Chapter 4:P98-107, focus on figures.