The Strategic Position

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The Strategic Position Chapter 3: Strategic Capabilities Gokhan Turgut

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.2

Strategic capabilities: the key issues

Figure 3.1

Strategic capabilities: the key issues
Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.3

Resources and competences
• Resources are the assets that organisations have or can call upon (e.g. from partners or suppliers),that is, ‘what we have’ . • Competences are the ways those assets are used or deployed effectively, that is, what we do well’.

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.4

Components of strategic capabilities

Table 3.1

Components of strategic capabilities
Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.5

Redundant capabilities
• Capabilities, however effective in the past, can become less relevant as industries evolve and change. • Such ‘capabilities’ can become ‘rigidities’ that inhibit change and become a weakness.

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.6

Dynamic capabilities
Dynamic capability is the ability of an organisation to renew and recreate its strategic capabilities to meet the needs of changing environments.

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.7

Threshold and distinctive capabilities (1)
• Threshold capabilities are those needed for an organisation to meet the necessary requirements to compete in a given market and achieve parity with competitors in that market – ‘qualifiers’. • Distinctive capabilities are those that critically underpin competitive advantage and that others cannot imitate or obtain – ‘winners’.

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.8

Threshold and distinctive capabilities

Table 3.2

Threshold and distinctive capabilities
Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.9

Core competences
Core competences1 are the linked set of skills, activities and resources that, together: • deliver customer value • differentiate a business from its competitors • potentially, can be extended and developed as markets change or new opportunities arise. 1G.

Hamel and C.K. Prahalad, ‘The core competence of the corporation’, Harvard Business Review, vol. 68, no. 3 (1990), pp. 79–91.

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.10

Strategic capabilities and competitive advantage
The four key criteria by which capabilities can be assessed in terms of providing a basis for achieving sustainable competitive advantage are: value, rarity, VRIN1 inimitability and non-substitutability Jay Barney: ‘Firm resources and sustained competitive advantage’, Journal of Management, vol. 17 (1991), no. 1, pp. 99–120. 1

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

• • • •

Slide 3.11

VRIN (1)
V – Value of strategic capabilities
Strategic capabilities are of value when they: • take advantage of opportunities and neutralise threats, • provide value to customers • provide potential competitive advantage • at a cost that allows an organisation to realise acceptable levels of return

Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, © Pearson Education Limited 2011

Slide 3.12

VRIN (2)
R – Rarity
• Rare capabilities are those possessed uniquely by one organisation or by a few others only. (E.g. a company may have patented products, have supremely talented people or a powerful brand.) • Rarity...
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