BSMP31 Strategic Management Spring 2013:
lectures 5 & 6
The Strategic Position
The Internal
Environment
Culture
Purpo
Capability Shifting from an industry
focus to a resource focus
THE
INDUSTRY ENVIRONMENT
Competitors Customers Suppliers STRATEGY STRATEGY THE FIRM
Goals and Values Resources and Capabilities Structure and Systems
The Firm-Strategy interface The Strategy-Environment Interface 2
3
Appraising Resources
Resource Characteristics Indicators
Tangible Resources Financial Borrowing capacity Internal funds generation Debt/Equity ratio
Credit rating
Net cash flow
minoritiesPhysical Plant and equipment: Size, location, technology flexibility. Land and buildings Raw materials Market value of fixed
asts.
Scale of plants
Alternative us for fixed
asts
Intangible Resources Technology Patent, copyrights, know how, R&D facilities Technical and scientific employees No. Of patents owned Royalty income
R&D expenditure女孩的英文单词
R&D staff
Reputation Brands. Customer loyalty, company reputation (with
suppliers, customers, government) Brand equity
Customer retention
Supplier loyalty
Human Resources Training, experience, adaptability, commitment and loyalty of
employees Employee qualifications,
Pay rates, turnover
Resources and Strategic Capabilities
4
Harley Davidson: strengths bad on
finally什么意思resources and capabilities
5
Resource/Capability Harley Honda
Technology R&D budget $164m. Only lective application of modern automotive technology, e.g. most engines lack overhead camshafts, multivalve cylinders, liquid cooling) R&D budget $5.7bn. Leader in automotive technology
with one of the biggest patent portfolios of any motor
vehicle firm. Able to spread its R&D investments over
both motorcycles and autos
Design Strong understanding of design within its own gment. Mainly traditional design concepts. Leader in customization. History of innovative design in motorcycles. Specialist
design studios in veral countries. Diver design
styles/concepts. Quick to imitate competitors’ designs
(e.g. Harley V-twin, Ducati “naked” styling) Purchasing 300,000 units offers limited bargaining power, but clo supplier collaboration Global purchasing for 10m+ motorcycles and 3.6m. cars;
huge bargaining power
Manufacture Sound quality management, just-in-time , and team production capabilities; but 300,000 units per year limits automation and scale economies limited by. Also, production fragmented across 6
geographically-disperd US plants
A world leader in high volume vehicle production. Most of Honda’s motorcycles produced in plants with annual capacity over 1m. units. Advanced automation Distribution V. strong US dealer network in US. Elwhere patchy. Excellent in managing dealer relations.
Worldwide dealer network Brand Unrivalled image in heavyweight bikes. Brand linked to a tradition, a philosophy, and a way of life. Conventional advertising is limited ($89m. expenditure]. Brand reputation supported and reinforced by promotional events (rallies, rides, charity campaigns) and direct customer contact Strong reputation for quality, performance, reliability, and value for money. Brand reputation bad ondictionary
functionality of product —little additional brand cachet or mystique. Honda brand supported by advertising ($2.8 bn.) and involvement in racing. Economies of scope in using a single brand across a wide product
range.
Customer rvice HOG allows direct linkage with customers Almost entirely through dealers Customer loyalty Unrivalled customer dedication Mainly bad on product satisfaction
Financial resources Revenues $5.6bn; net profit $0.7bn. Revenues $121.2bn; net profit $5.1bn. Capability-Bad Strategy at 3M
Carborundum mining Sandpaper Scotchtape Road signs & markings
Post-it notes Audio tape Surgical tapes & dressings Videotape
Acetate film Floppy disks &
data storage
products
Pharmaceuticals
go to sleep
Houwares/kit-
chen products
Abrasives Adhesives New-product
development
冬季长裙搭配
&
introduction Thin-film technologies PRODUCTS CAPABILITIES Materials sciences
Health sciences Microreplication Flexible
circuitry
6
Key success factors, resources and
capabilities
Key Success factors (KSFs)
•What do customer want from our products/rvices?
resort•What do we need to survive competition?
What resources & capabilities do we need to deliver
the KSFs?
7 Threshold and distinctive
capabilities
•Threshold capabilities are tho 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 tho that critically underpin competitive advantage and that others cannot imitate or obtain –‘winners’
8
Threshold and distinctive capabilities
9 Dyson 10
Threshold Resources Threshold Competencies
∙engineering design equipment ∙product supplies ∙manufacturing space ∙offices and facilities ∙appropriate personnel ∙sufficient customers ∙general managerial skills including
distribution and marketing
∙engineering design skills
∙cost control through manufacturing in low cost
locations
∙quality assurance and control
∙the ability to attract customers sufficiently
inspired by design to pay premium prices
across different markets
Distinctive Resources Distinctive Competencies
∙James Dyson himlf ∙the Dyson brand and strategy of high-end products in an otherwi staid market ctor ∙HQ building and related laboratories designed to foster innovation ∙product portfolio and associated patents ∙high R&D budget possibly through being privately owned ∙history of the company ud extensively in PR and advertising ∙ownership of the manufacturing facilities and hence control over the working ∙conditions of the employees versus other companies that contract out their manufacturing and can be accud of
supporting poor labour conditions ∙inspirational leadership around the value
of engineering
∙design engineering skills that transform
ideas into viable products
∙the competence to make engineering
aesthetically attractive
∙amless value chain despite design and
manufacturing being in different locations
∙being one step ahead of competitors
attracting early adopter customers and
sabotagesubquent followers including premium
pricing
∙never being boring; always being surprising
Developing strategic capabilities
Internal capability development:
•Leveraging capabilities – identifying capabilities in one part of the organisation and transferring them to other parts (sharing best practice). •Stretching capabilities - building new products or rvices out of existing capabilities.
External capability development – adding capabilities through mergers, acquisitions or alliances.
Strategic capabilities and
competitive advantage
supplyingThe four key criteria by which capabilities can
be assd in terms of providing a basis for achieving sustainable competitive advantage are: •value,
•rarity,
•inimitability and
VRIN1
•non-substitutability
monarch
1Jay Barney: ‘Firm resources and sustained competitive advantage’, Journal of Management, vol. 17 (1991), no. 1, pp. 99–120.
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