Resources, Capabilities

1
Resources, Capabilities Competencies

• Session 7

2
Mission to Mars Polar Lander
Source NASA
3
Resource based view

• Differential performance of firms in the same
  industry
• Firm profitability driven by structure of assets
  within the firm
• Heterogenous and immobile assets
• Dynamic capabilities view
• Internal view, whereas IO is an external view

4
Competitive Advantage

• Firm profit rate exceeds industry average
  rents, abnormal profits
• Sustainable competitive advantage
• Competitive advantage resource based view-
  exploits differences
• Competitive advantage IO view doing the same
  thing as other firms
• Value creation
• Low costs

5
Value Chain

• Primary activities, support activities
• Similar to the assembly line concept
• Sequential relationship, no feedback loop
• Networks elaborated value chains, feedback loop
  structures

6
Competency, Resources, Capabilities

• Competency firms unique strength that allows
  it to create value
• Resources (what you have)
• Tangible, Intangible, Human
• Capabilities (what you do with resources)

7
Creating Corporate Advantage

• Essence of corporate
• advantage the way a
• company creates value
• through configuration
• and coordination of its
• multibusiness activities.

Source Collis Montgomery
8
Resources, Capabilities and Competitive Advantage
Industry Key Success Factors
Competitive Advantage
Strategy
Organizational Capabilities
Resources
Intangible
Human
Tangible
Skills Knowledge Communication
ability Motivation
Technology Reputation Culture
Financial Physical
Source Grant
9
Capabilties
Source Grant
10
Companies with high PBV ratios
Source Business Week
11
Rent Earning Potential of Resources/Capabilities
Scarcity
Establish competitive advantage
Relevance
Durability
Transferability
Profit potential of resource/ capability
Sustain competitive advantage
Replicability
Property Rights
Appropriate competitive advantage
Bargaining Power
Embeddedness
Source Grant
12
Why companies fail

• Inertia Resistance to change
• Prior strategic commitments
• Path dependence
• Capabilities grow cumulatively
• Icarus paradox

13
Sustaining competitive advantage

• Building blocks of competitive advantage
• Scheduling change
• Continuous learning
• Tracking environment
• Overcoming inertia
• Best Practices, Benchmarking