New Balance Case Study: Capabilities and Resources

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Appendix 3 – Internal Analysis


a) Tangible resources:
i) Physical: plants and equipment
* H-D invests continuously in plants and equipment. * H-D plants are located in different states in the US, very far from each other, which causes very high transportation costs.

i) Technological:
* H-D is known for its technological backwardness in terms of engines, suspension systems, braking systems, and transmissions.

iii) Financial
* Steady increase in profit for 20 years (until 2007) * Downturn in the last year (2008)
* Limited ability to invest in technology and new products due to smaller corporate sizes and inability to share research expenditure across cars and bikes

iv) Organisational
* Flatter and more team-based organisational structure, which provides better flexibility and effectiveness

b) Intangible resources:
ii) Human:
* High level of employees’ loyalty and commitment to the company * Good management-employee relationship, characterised by open communication, employee support (e.g. education program)

iii) Innovation:
* lack of significant innovation activities

iv) Reputation:
* Extremely strong brand name
* Very high customers loyalty
* Strong relationship with the customers through HOG * Close relationship with the suppliers through SAC

v) Distribution network:
* Very well developed distribution network
* Close relationship with the dealers – dealer development program

vi) Strategic alliances:
* Alliances with Porsche AG, Ford, and Gemini Racing Technologies – provide access to automotive technology * Recently has formed an alliance with Shell


* Vision
* Offering a unique/personalised product
* Product support/customer service
* Successful implementation of acquisitions
* Developing a ‘Learning Organisation’


Potential strategic capability| Valuable for customers?| Rare?| Difficult to imitate/substitute/replicate?| Specific for the organisation/organisation actually delivers it?| Physical resources| Yes| No| | |

Financial resources| Yes| Yes| Yes| Not specific for the organisation| Technological resources| Yes| No| | |
Organisational resources| Yes| Yes| No| |
Human resources| Yes| Yes| Yes| Not specific for the organisation| Innovation| Yes| Yes| Yes| Organisation doesn’t actually deliver it| Reputation| Yes| Yes| Yes| Yes|
Distribution network| Yes| Yes| Yes| Not specific for the organisation| Strategic alliances| Yes| Yes| No| |
Vision| Yes| Yes| No| |
Offering a unique/personalised product| Yes| Yes| No| | Product support/customer service| Yes| Yes| No| |
Successful implementation of acquisitions| Yes| No| | | Developing a ‘Learning Organisation’| Yes| Yes| No| |

APPENDIX 3: Internal Analysis

Financial: * Strong return on equity 31% in 2005 (Grant, 2008:162) * Strong return on assets of 28% in 2005 (Grant, 2008:162) * Large cash flow * Strong borrowing capacity * Growing profits| Reputational: * Strong brand identity and value in the US * Consistency with quality assurance, reliability, delivery and customer expectations| Physical: * Plants facilities in US, Brazil and European headquarters in England| Human Resources: * Open communications, self management and health benefits * Dealer Development Program * Training for dealers to improve customer relations * | Organisational: * Non-hierarchical management teams * Work teams:Natural work teamsProcess operating groupsPlant leadership groups| Innovation: * Trademarks * Licensing *...
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