4.
1 Resources: VRIO Framework
Resources: VRIO
Framework
1. Values
2. Rareness
3. Imitability
4. Organization
4.2 Core Competencies and Distinctive Competencies
Core Competencies and
Distinctive Competencies
Core Competencies
Things a corporation can do exceedingly well
Distinctive Competencies
Core competencies that are superior to those of
competitors
4.3 Sustainability of Distinctive Competency
Factors Determining
Sustainability of a
Distinctive
Durability
Competency
Imitability
Transparency
Transferability
Replicability
4.4 Continuum of Resources Sustainability (Fig. 4.1)
Continuum of Resources Sustainability
Level of Resource Sustainability
High Low
Hard to imitate (Easy to Imitate)
Slow-Cycle Standard-Cycle Fast-Cycle
Resources Resources Resources
· Strongly shielded · Standardized mass · Easily duplicated
production
· Patents, brand name · Idea driven
· Economies of scale
· Gillette: Sensor razor Complicated processes · Sony: Walkman
· Chrysler: Mini-van
Source: Suggested by J. R. Wiliams, “How Sustainable Is Your Competitive Advantage?” California
Management Review (Spring 1992), p. 33.
4.5 Industry Value Chain
Typical Value Chain for a
Manufactured Product
Raw Primary Fabrication Product Distributor Retailer
Materials Manufacturing Producer
Source: Suggested by J. R. Galbraith, “Strategy and Organization Planning,” in The Strategy Process: Concepts,
Contexts, Cases, 2nd ed., edited by H. Mintzberg and J. B. Quinn (Englewood Cliffs, N.J.: Prentice Hall, 1991), p.
316.
Corporate Value Chain
4.6 Corporation Value Chain
Firm Infrastructure
(general management, accounting, finance, strategic planning)
Human Resource Management
(recruiting, training, development)
Support
Activities
Technology Development
(R&D, product and process improvement)
Profit
Procurement Margin
(purchasing of raw materials, machines, supplies)
Source: Adapted/
reprinted with the
permission of the
Inbound Operations Outbound Marketing Service
Logistics (machining, Logistics and Sales (installation, The Free Press, an
(raw assembling, (warehousing (advertising, repair, parts) imprint of Simon &
materials testing) and promotion, Schuster, from
handling and distribution pricing, Competitive
warehousing) of finished channel Advantage:
product) relations) Creating and
Sustaining Superior
Performance by
Michael E. Porter, p.
37. Copyright ©
Primary Activities 1985 by Michael E.
Porter.
4.7a Basic Structures of Corporations: Simple and Functional (Fig. 4.4)
Basic Structures of
Corporations: Simple and
Functional I. Simple Structure
Owner-Manager
Workers
II. Functional Structure
Top Management
Manufacturing Sales Finance Personnel
4.7b Basic Structures of Corporations: Divisional (Fig. 4.4)
Basic Structures of
Corporations: Divisional
III. Divisional Structure*
Top Management
Product Division A Product Division B
Manufacturing Finance Manufacturing Finance
Sales Personnel Sales Personnel
*Conglomerate structure is a variant of the division structure.
4.8 Strategic Business Unit
Strategic Business Unit
Independent product-market unit with:
1. Unique mission
2. Identifiable competitors
3. External market focus
4. Control of its business functions
4.9 Attributes of Corporate Culture
Attributes of Corporate
Culture
Intensity
Integration
4.10 Functions of Corporate Culture
Functions of Corporate
Culture
1. Conveys sense of identity
2. Generates employee commitment
3. Adds to organizational stability
4. Serves as a frame of reference
4.11 Marketing Mix Variables (Table 4.1)
Marketing Mix Variables
Product Place Promotion Price
Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns
Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.:
Prentice-Hall, 1980), p. 89. Copyright © 1980. Reprinted by permission of Prentice-Hall, Inc.
4.12 The Product Life Cycle (Fig. 4.5)
The Product Life Cycle
Sales
*The right end of the Growth
stage is often called
Competitive Turbulence
because of price and
distribution competition that
shakes out the weaker
competitors. For further
information, see C. R.
Introduction Growth* Maturity Decline Wasson, Dynamic
Competitive Strategy and
Time Product Life Cycles, 3rd ed.
(Austin, Tex.: Austin Press,
1978).
4.13 R&D Mix
R&D Mix
Basic R&D
Product R&D
Process (Engineering) R&D
4.14 Technological Discontinuity (Fig. 4.6)
Technological Discontinuity
What the S-Curves Reveal
Mature
Technology
roduct Performance New
Technology
Research Effort/Expenditure
In the corporate planning process, it is generally assumed Source: P. Pascarella, “Are You
that incremental progress in technology will occur. But past Investing in the Wrong Technology?”
developments in a given technology cannot be extrapolated Industry Week (July 25, 1983), p. 38.
into the future, because every technology has its limits. The Copyright © 1983 Penton/IPC. All
key to competitiveness is to determine when to shift re- rights reserved. Reprinted by
sources to a technology with more potential. permission.
4.15 Economies of Scale versus Scope
Economies of Scale
versus
Economies of Scope
4.16 Internal Factor Analysis Summary (IFAS): Blank
Internal Factor Analysis Summary
(IFAS)
Weighted
Internal Factors Weight Rating Score Comments
1 2 3 4 5
Strengths
Weaknesses
Total Weighted Score 1.00
Notes: 1. List strengths and weaknesses (5–10 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not
Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to 1.00.
3. Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor. 4. Multiply each
factor’s weight times its rating to obtain each factor’s weighted score in Column 4. 5. Use Column 5 (comments) for rationale used for
each factor. 6. Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how well the
company is responding to the strategic factors in its internal environment.
Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and Hunger
Associates. Reprinted by permission.
4.17 Internal Factor Analysis Summary (IFAS): Maytag as Example (Table
4.2)
Internal Factor Analysis Summary
(IFAS):
Maytag as Example
Weighted
Internal Factors Weight Rating Score Comments
1 2 3 4 5
Strengths
• Quality Maytag culture .15 5 .75 Quality key to success
• Experienced top management .05 4 .20 Know appliances
• Vertical integration .10 4 .40 Dedicated factories
• Employee relations .05 3 .15 Good, but deteriorating
• Hoover’s international .15 3 .45 Hoover name in cleaners
orientation
Weaknesses .05 2 .10 Slow on new products
• Process-oriented R&D .05 2 .10 Superstores replacing small
dealers
• Distribution channels
.15 2 .30 High debt load
• Financial position .20 2 .40 Hoover weak outside the
United Kingdom and
• Global positioning
Australia
.05 4 .20 Investing now
• Manufacturing facilities
1.00 3.05
Total Weighted Score
