RESOURCES AND CAPABILITIES ANALYSIS

Transcription

1 INTRODUCTION RESOURCES AND CAPABILITIES ANALYSIS Differences between organisations and companies need to be taken into account Problematic : the strategic importance of organisation s resources and capabilities Jay Barney (University of Utah) The resource-based view the competitive advantage and superior performance of an organisation are explained by the distinctiveness of its resources and capabilities > 2 key issues : companies are heterogeneous and companies can have trouble in imitating and obtaining the resources and capabilities of another WHAT ARE RESOURCES AND CAPABILITIES? The resources and capabilities of an organisation contribute to its long-term survival and potentially to competitive advantage o *Resources : the assets that organisations have or can call upon o *Capabilities : the ways those assets are used or deployed Resources : what we have Machines, buildings, raw materials, patents, databases, computer systems Balance sheet, cash flow, suppliers of funds Managers, employees, partners, suppliers, customers Physical Financial Human Capabilities : what we do well Ways of achieving utilization of plant, efficiency, productivity, flexibility, marketing Abitily to raise funds and manage cash flows, debtors, creditors, etc How people gain and use experience, skills, knowledge, build relationships, motivate others and innovate *Threshold resources and capabilities : those needed for an organisation to meet the necessary requirements to compete in a given market and achieve parity with competitors in that market > Change in threshold level change in critical success factors or activities of the competitors and new entrants > they don t create themselves competitive advantage and the basis of superior performance Distinctive resources and capabilities are required to achieve competitive advantage > underpin competitive advantage and others can t imitate or obtain > ways of doing things that are unique Gary Hamel and C.K. Prahalad Core competences Distinctive capabilities or competences typically remain unique because they comprise a bundle of constituent skills and technologies rather than a single, discrete skill or technology Distinctive resources and capabilities necessary for sustainable competitive advantage and superior economic performance

2 SUSTAINED COMPETITIVE ADVANTAGE VRIO *Valuable resources and capabilities : those which create a product or a service that is of value to customers and enables the organisation to respond to environmental opportunities or threats o taking advantage of opportunities and neutralizing threats : complementarity with the external environment of an organisation opportunity : when a resource or capability increases the value for customers o value to customers : in practice, it is often ignored or poorly understood o cost : allow the organisation to make the returns expected of it Rarity : rare resources and capabilities are those possessed uniquely by one organisation or by a few others *Inimitability : resources and capabilities that competitors find difficult and costly to imitate or obtain or substitute o Risk of over-generalisation : unusual for competitive advantage to be explainable by differences in the tangible resources of organisations o Linkages that integrate activities, skills, knowledge and people both inside and outside the organisation Complexity o internal linkages o external linkages Inimitability of resources and strategic capabilities Causal ambiguity o characteristic ambiguity Culture and history o taken-for-grated activities o path dependency Organisational support : need of an organisation s structure and formal and informal management control systems that support and facilitate exploitation o Adjustment factor : complementary capabilities : useful in the exploitation of other capabilities that can provide for competitive advantage *Organisational knowledge : organisation-specific, collective intelligence, accumulated through formal systems and people s shared experience Ikijuro Nonaka and Hiro Takeuchi Distinction between explicit and tacit organizational knowledge >> why this is important in terms of achieving competitive advantage Explicit : form of a codified information resource Tacit : more personal, context-specific, so hard to formalize and communicate

3 VRIO Value : do resources and capabilities exist that are valued by customers and enable the organisation to respond to environmental opportunities or threats? Rarity : do resources and capabilities exist that no (or few) competitors possess? Inimitability : are resources and capabilities difficult and costly for competitors to obtain and imitate? Organisational support : is the organisation appropriately organized to exploit the resources and capabilities? DIAGNOSING RESOURCES AND CAPABILITIES *VRIO analysis helps to evaluate if, how and to what extent an organisation or company has resources and capabilities that are valuable, rare, inimitable and supported by the organisation > additive effect > for managers, it is important to distinguish between sustained or temporary competitive advantage VS competitive parity or competitive disadvantage *Value chain describes the categories of activities within an organisation which, together, create a product or service x managers have to know which activities are important in creating value and which are not x Michael Porter Representation of a value chain Primary activities : linked with the creation or delivery of a product or a service Support activities : help to improve the effectiveness or efficiency of primary activities o procurement : acquire the various resource inputs to the primary activities o technology development : direct link with a product (R&D) or with processes (process development) or with a particular resource (raw materials improvements) o HRM o infrastructure : formal systems (planning, finance, quality control ) x understand the strategic position of an organisation and analyse resources and capabilities o generic description of activities o VRIO analysis o analyse the cost and value of activities > identify sets of value activities > assess the relative importance of activity costs internally > assess the relative importance of activities externally > identify where and how can costs be reduced?

4 *Value system : set of inter-organisational links and relationships that are necessary to create a product or service >> understand the strategic position and where valuable resources and capabilities reside x Make or buy or outsourcing decision for a particular activity is critical => which activity needs to be part of the internal value chain and doesn t? x What are the activities and cost/price structures of the value system? => The more an organisation outsources, the more is ability to evaluate and influence the performance of other organisations in the value system may become a critically important capability in itself and even a source of competitive advantage x Where are the profit pools? => *Profit pools : the different levels of profit available at different parts of the value system ; link with competitive intensity x Partnering => question of the best partners and the kinds of relationships with them Activity systems >> Identify what these activities are, why they are valuable to customers, how the various activities fit together and how they are different from competitors Michael Porter Higher order strategic themes 1 The organisation meets the critical success factors determining them in the industry 2 Identify the clusters of activities Exemple : Geelmuyden. Kiese >> how effective communication can influence the power dynamics of decisionmaking processes o work at a strategic level based on its own in-house methodology o clear stance on integrity of communication o high degrees of freedom for staff o recruitment based on values of openness and integrity / learning opportunities thanks to a mentoring system o strong financial incentives 4 points in mapping activity systems x relationship to the value chain : activities parts of a value chain / a greater understanding of the complexity of resources and capabilities x the importance of linkages and fit : activities that create value to customers pulling in the same direction and supporting each other > danger of piecemeal change : damage the positive benefits > challenge of managing change x Relationship to VRIO x superfluous activities : activities don t contribute to value creation *Benchmarking : a means of understanding how an organisation compares with others >> 2 approaches : o industry/sector benchmarking : information about performance standards o best-in-class benchmarking : comparison between organisation s performance or capabilities and best-in-class performance >> importance in the impact on reviewing resources and capabilities but 2 limitations

5 o surface comparisons : not identify the reasons for lower performance o simply achieving competitive parity : help to develop capabilities and create value in order to achieve threshold level or competitive parity *SWOT provides a general summary of the strengths and weaknesses explored in an analysis of resources and capabilities and the opportunities and threats explored in an analysis of the environment x scoring mechanism : a means of getting managers to assess the interrelationship between the environmental impacts and the strengths and weaknesses of the firm x 2 main dangers : o Listing : generating very long lists of apparent strengths, weaknesses, opportunities and threats = not clear => prioritisation o Summary, not a substitute because 2 dangers : biased views and lack of specificity x help focus discussion on future choices and the extent to which an organisation is capable of supporting these strategies x *TOWS Matrix can be used to identify options in address a different combination of the internal factors and the external factors DYNAMIC CAPABILITIES *Dynamic capabilities : an organisation s ability to renew and recreate its resources and capabilities to meet the needs of changing environments Teece Generic types of dynamic capabilities x sensing = strategic position : scaning, searching, exploring opportunities across markets and technologies x seizing = strategic choices : an opportunity must be seized and addressed through new products and services, activities x reconfiguring = enacting strategies : renewal and reconfiguration of organizational capabilities and investments Micro-foundations in people s behavior within organisations Tension between ordinary capabilities and dynamic capabilities Different approaches to manage resources and capabilities o internal capability development : Could resources and capabilities be added or upgraded so that they become more reinforcing of outcomes that deliver against critical success factors? x building and recombining capabilities : capability innovation, entrepreneurship and intrapreneurship skills x leverage capabilities : seek resources and capabilities which are not present in other business units x stretching capabilities

6 o external capability development : develop resources and capabilities by looking externally o ceasing activities : could current activities, not central to the delivery of value to customers, be done away with, outsourced or reduced in cost? o awareness development : develop the ability of people to recognize the relevance of what they do in terms of how that contributes to the strategy of the organisation = organizational learning