Strategic Position: Strategic Capability. Strategic Management (5 ECTS) Ismo Vuorinen Principal Lecturer Autumn 2010

Transcription

1 Strategic Position: Strategic Capability Strategic Management (5 ECTS) Ismo Vuorinen Principal Lecturer Autumn 2010

2 Core Concepts in Strategic Capability Foundations Cost efficiency Sustainability Organisational knowledge Analysis Development

3 What is Strategic Capability? Strategic capability refers to the resources and competences of an organisation needed for it to survive and prosper.

4 Strategic Capabilities and Competitive Advantage

5 What are Resources? Tangible resources are physical assets of an organisation such as plant, labour, and finance. Intangible resources are non-physical assets such as information, reputation, and knowledge.

6 Resource Categories Physical resources Financial resources Human resources Intellectual capital

7 The Terminology of Strategic Capability Threshold resources Threshold competences Unique resources Core competences

8 What are Core Competences? Core competences are the skills and abilities by which resources are deployed through an organisation s activities and processes such as to achieve competitive advantage in ways that others cannot imitate or obtain.

9 Bases of Competences Cost efficiency Value-added to the customer Managing internal and external linkages Robustness

10 Sources of Cost Efficiency Economies of scale Experience Cost efficiency Supply costs Product design

11 The Experience Curve Competences in activities develop over time based on experience, resulting in cost efficiencies Growth may not be optional Unit costs should decline year on year First mover advantage is important

12 The Experience Curve

13 Capabilities for achieving and sustaining competitive advantage Value Rarity Inimitable Substitution Dynamic

14 Rarity of Strategic Capabilities Ease of transferability Sustainability Core rigidities

15 Core Competences Lead to Competitive Advantage When They relate to an activity that underpins the value in the product features They lead to levels of performance that are significantly better than competitors They are difficult for competitors to imitate

16 Criteria for Inimitability Complexity Robustness of strategic capability Culture and history Causal ambiguity

17 What are Dynamic Capabilities? Dynamic capabilities are an organisation s abilities to renew and recreate its strategic capabilities to meet the needs of a changing environment.

18 What is Organisational Knowledge? Organisational knowledge is the collective experience accumulated through systems, routines, and activities of sharing across the organisation.

19 Diagnosing Strategic Capability Value chain/ Value network Activity maps Benchmarking SWOT analysis

20 What is a Value Chain? A value chain describes the categories of activities within and around an organisation, which together create a product or service.

21 The Value Chain

22 What is a Value Network? A value network is the set of interorganisational links and relationships that are necessary to create a product or service.

23 The Value Network

24 Understanding the Capabilities in Relation to the Value Network Which activities are central important to organisation s strategic capability? Where are the profit pools? What should be outsourced? Who might be the best partners in the parts of the value network?

25 An Activity System Map

26 Lessons Learned from Activity Maps Consistency and reinforcement Difficulties of imitation Trade-offs

27 Approaches to Benchmarking Historical benchmarking Industry/sector benchmarking Best-in-class benchmarking

28 SWOT Analysis Strengths Weaknesses Opportunities Threats

29 SWOT steps Identify current S Identify key SWOTs Explore relationships strengths and weaknesses ---- opportunities and threats Recommend new/modified strategy

30 Improving SWOT See as general aid. Make measures and criteria explicit. Prioritize SWOTs. Use outside consultants. Specify and substantiate SWOTs.

31 Limitations in Managing Strategic Capabilities Competences valued but not understood Competences are not valued Competences are recognised, valued, and understood

32 Developing Strategic Capabilities Add and change Exploit Extend Cease Stretch Develop externally