Leveraging Capability Globally and Core Competence GFMA3093 PDF

Summary

This document is a presentation on core competency and strategic analysis. It explores tangible and intangible resources and capabilities, and how they contribute to an organization's competitive advantage. The presentation would be helpful for students studying international business management.

Full Transcript

Leveraging Capability Globally and Core Competence GFMA3093 INTERNATIONAL BUSINESS MANAGEMENT SEMINAR Introduction: Strategic Analysis Strategic analysis involves 2 stages:  InternalAnalysis  External Analysis Internal analysis – a systematic evaluation of t...

Leveraging Capability Globally and Core Competence GFMA3093 INTERNATIONAL BUSINESS MANAGEMENT SEMINAR Introduction: Strategic Analysis Strategic analysis involves 2 stages:  InternalAnalysis  External Analysis Internal analysis – a systematic evaluation of the key internal features of an organization External analysis – a systematic evaluation of the competitive environment (industry and market) Analysis of the Global Organization Internal analysis When considering the internal analysis of any organization, four areas need to be considered:  The organization’s resources, capabilities, and competences  The way in which the organization configures and coordinates its key value adding activities  The structure of the organization and the characteristics of its culture  The performance of the organization as measured by the strength of the products. This, in turn, is largely determined by the three aforementioned factors Internal Analysis Enables managers to gain a picture of the organization Such information essential when deciding strategic options or on adjusting global strategy to provide optimum performance “Superior performance depends upon management’s ability to employ their resource inputs into core competences more effectively than competitors. This, in turn, depends upon how well-configured the organization’s value adding activities are and how it configures and coordinates its value-adding activities in the various parts of the world”. Resources, Competences and Capabilities Core Competence: Resources: Distinctive and Human, financial, Capabilities: superior skills, physical, technological, Industry specific skills, technology relationship, Perceived customer legal, information + relationships, = knowledge and reputation benefits/ value organizational Of the firm added Tangible and knowledge, Visible assets Intangible and Unique and difficult invisible assets to copy Denotes feedback loop Denotes core competences development Resources, Competences and Capabilities Core Competences/Distinctive capabilities  The combinations of resources and capabilities which are unique to a specific organization and which are responsible for generating its competitive advantage  Core competences can only create competitive advantage when they are applied in markets  Examples: reputation, architecture (that is, internal and external relationships), innovation and strategic assets  Core competences must be perceived by customers as providing benefits if they are to create competitive advantage Resources, Competences and Capabilities Resources  Assets which are employed in the activities and processes of the organization  Can be either tangible or intangible  Can be obtained externally from suppliers in resource markets or can be internally generated.  Internally generated resources are organization- specific and externally obtained are organization- addressable  Can be highly specific and non-specific Understanding Resources and Capabilities The basic proposition of the Resource-Based View (RBV) is that a firm consists of a bundle productive resources and capabilities. Resources are “the tangible and intangible assets a firm uses to choose and implement its strategies”. Some argue that capabilities as firm’s capacity to dynamically deploy resources. The two terms will be used interchangeably and often in parallel. Understanding Resources and Capabilities All firms, including the smallest ones, possess a variety of resources and capabilities Two types of resources:- tangible and intangible Tangible resources and capabilities are assets that are observable and more easily quantified. Intangible resources and capabilities are harder to observe and more difficult (or sometimes impossible) to quantify. Broadly organized into 4 categories: Tangible Resources and Capabilities Financial resources and capabilities  The depth of a firm’s financial pockets. Examples include abilities to generate internal funds and raise external capital Physical resources and capabilities  Plants,offices, and equipment, geographic locations and access to raw materials and distribution channels Tangible Resources and Capabilities (cont.) Technological resources and capabilities  Skillsand assets that generate leasing-edge products and services supported by patents, trademarks, copyrights, and trade secrets Organizational resources and capabilities A firm’s planning, command, and control systems and structures. In general, younger firms tend to rely more on the visions of managers (founders), whereas more established firms usually have more formalized systems and structures Intangible Resources and Capabilities Harder to observe, yet it is widely acknowledge that they must be “there” because no firm is likely to generate competitive advantage by relying on tangible resources alone Examples of intangible resources and capabilities include: Intangible Resources and Capabilities (cont.) Human resources and capabilities  The knowledge, trust, and talents embedded within a firm that are not captured by its formal, tangible systems and structures Innovation resources and capabilities A firm’s assets and skills to (1) research and develop new products and services and (2) innovate and change ways of organizing Intangible Resources and Capabilities (cont.) Reputational resources and capabilities A firm’s abilities to develop and leverage its reputation as a solid provider of goods/services, an attractive employer, and /or a socially responsible corporate citizen.  Reputation can be regarded as an outcome of a competitive process in which firms signal their attributes to the constituents. Examples of Tangible Resources and Capabilities Tangible Resources and Examples Capabilities Financial Ability to generate internal funds Ability to raise external capital Physical Location of plants, offices, and equipment. Access to raw materials and distribution channels Technological Possession of patents, trademarks, copyrights, and trade secrets Organizational Formal planning, command, and control systems Integrated management information systems Examples of Intangible Resources and Capabilities Intangible resources and Examples capabilities Human Managerial talents Organizational structures Innovation Research and development capabilities Capabilities for organizational innovation and change Reputational Perceptions of product quality, durability and reliability Reputation as a good employer Reputation as a socially responsible corporate citizen Resources, capabilities and core competence Core competences can be evaluated against a set of criteria:  Complexity – how elaborate is the bundle of resources and capabilities which comprise the core competence?  Identifiability – how difficult is it to identify  Imitability – how difficult it is to imitate?  Durability – How long does it endure?  Substitutability – how easily can it be replaced by an alternative competence?  Superiority – is it clearly superior to the competences of other organizations?  Adaptability – how easily can the competence be leveraged or adapted  Customer orientation – how is the competence perceived by customers and how far is it linked to their needs? Resources, Competences and Capabilities By evaluating core competences against these criteria, managers can gain a valuable insights into their ability to bring about any sustained advantage. The strengths and weaknesses of existing competences can be assessed and any opportunities or needs for competence building and leveraging can be identified.

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