CHAPTER 3 INTERNAL ANALYSIS

Topics: Strategic management, Value, Delta Model Pages: 6 (1336 words) Published: March 19, 2015
I. Analytical Methods (Tools)
A. SWOT
B. RBV
C. VRIO
D. VCA- value chain analysis
E. The Functional Approach-

II. SWOT
A. Key elements:
1. Strengths
2. Weaknesses
3. Opportunities
4. Threats
B. A Way to Tie Some of These Together
1. Internal -> strengths & weaknesses
2. External -> opportunities & threats
C. Goal = to maximize your strengths and opportunities while minimizing your weaknesses and threats (i.e., create a competitive advantage, preferably a sustainable one) D. Reasoning: an effective strategy fits the internal firm and the external environment E. What Are Some Ways We Can Determine Internal Strengths and Weaknesses? 1. RBV

2. VRIO
3. Using a functional approach (not unlike structural functionalism)

III. RBV Model- resource based view
A. Underlying Premise: Firms differ because each has a unique set or bundle of resources (note the word unique and the word different which are related to differentiation) B. Types of Basic Resources

1. tangible assets
2. intangible assets (including a firm's capabilities and skills the system, how they bring all the parts together and how they use these parts) C. Rule: Basic resources may (should?) give a firm a competitive advantage or even a sustained competitive advantage, and are related to the concept of core competencies D. What makes a resource valuable? The answers include:

1. does the asset give the firm competitive superiority (advantage) 2. is the resource in short supply and central to fulfilling our customers' needs (does it create value?) 3. is the resource easily copied or acquired? (make sure to read you book regarding competitive disadvantage, competitive parity, and competitive advantage - sustained and temporary, as well as look at the concept of isolating mechanisms which are related to barriers to imitation- isolating mechanisms 4 examples 1. Being physically unique 2. Path dependent resources 3. Causal ambiguity- Michael porter SYSTEMS 4. Economic deterrence- is it going to cost me so much to do this it does not make any sense) 4. can our firm capture or appropriate the profit (i.e., the benefits or advantages) generated by the resource? i.e. sports team owners, unions for players take some of the money coming in 5. will the resource rapidly depreciate?

6. are alternatives available or it is its substitutability high? E. Guidelines for Identifying and Evaluating Resources
1. break down the resource into specific competencies
2. look at the different functional areas of our firm
3. do not look merely at isolating mechanisms - instead look at organizational processes and combinations of resources (i.e., look at the system and how the resource fits it) 4. use the VCA
5. use RBV
6. use SWOT

IV. VRIO
A. Elements
1. value
2. rarity
3. imitability
4. organization
B. Value
1. Are our resources and capabilities valuable?
a. do they increase profit and/or reduce cost?
b. do they enable us to exploit external opportunities or to neutralize external threats? c. do they allow us to create a competitive position (advantage)(one that we can sustain)? POSITIONING 2. If so, they are a strength but, if not, they are a weakness. 3. Amongst other things, do a VCA to help answer these questions. c. Rarity

1. How many firms already possess this/these resources and capabilities? And also look at how many can easily and cheaply acquire them? 2. Are these resources and capabilities rare or common?
3. Note that sometimes even if they are not exclusive to our firm, they still might generate a competitive advantage for us. If they’re rare they’re probably valuable.
d. Imitability
1. Do firms without these resources and capabilities face a cost disadvantage in obtaining or developing them? This relates to the term imperfect imitability. In fact, can they obtain and develop them? 2. Forms of Imitability (not to be confused with Porter's ways to copy COPYING 1. REPOSITIONING 2. STRADDLING) a. direct duplication

b. substitutes
3. What...
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