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Internal Analysis - Resources, Capabilities, and Activities

This document provides an overview of internal analysis for strategic management. It discusses evaluating a company's internal resources, capabilities, and activities to identify strengths and weaknesses. Key points include identifying tangible and intangible resources and organizational capabilities; assessing resources based on their value, rareness, imitability, and ability to exploit them; gaining resources through asset endowment, acquisition, sharing, or internal development; examining value chains and linkages across activities; and scanning functional areas like marketing, R&D, and HR. The document emphasizes analyzing internal factors is critical to determine how a firm can seize opportunities and mitigate threats.

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42 views19 pages

Internal Analysis - Resources, Capabilities, and Activities

This document provides an overview of internal analysis for strategic management. It discusses evaluating a company's internal resources, capabilities, and activities to identify strengths and weaknesses. Key points include identifying tangible and intangible resources and organizational capabilities; assessing resources based on their value, rareness, imitability, and ability to exploit them; gaining resources through asset endowment, acquisition, sharing, or internal development; examining value chains and linkages across activities; and scanning functional areas like marketing, R&D, and HR. The document emphasizes analyzing internal factors is critical to determine how a firm can seize opportunities and mitigate threats.

Uploaded by

sukhisinghusa3
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Strategic Management

Professor Dr. Xinming He

1
3. Internal Analysis: Resources,
Capabilities, and Activities
Strategic Management Model

3
Environmental Scanning
Why internal scanning?

• Identify internal strengths – something the


company has or does better than competitors.
• Identify internal weaknesses – something the
company does not have or does not do as well as
competitors.
Resource-based approach

Internal strategic factors:

Critical strengths and weaknesses that are likely to


determine if the firm will be able to take advantage of
opportunities while avoiding threats.
Resource-based approach
• Resources
• An organization’s assets and are thus the basic building
blocks of the organization.
• Tangible, intangible
• Capabilities
• Refer to a corporation’s ability to exploit its resources.
• Consist of business processes and routines that manage the
interaction among resources to turn inputs into outputs
Evaluating key resources
1. Valuable: Does it provide customer value and
competitive advantage?
2. Rareness: Do no other competitors possess it at the
same level?
3. Imitability: Do the competitors have the financial
ability to imitate?
4. Organization: Is the firm organized to exploit the
resource?
Often competitive advantage comes from
knowledge

• Explicit Knowledge:
• Knowledge that can be easily articulated and
communicated.
• Tacit Knowledge:
• Knowledge that is not easily communicated because
it is deeply rooted in employee experience or in a
corporation’s culture.
How can firms gain resources/capabilities?
Access to a distinctive competency

• Asset endowment
• Acquired from someone else
• Shared with another business
• Built and accumulated within the company
Access to a distinctive competency

• Clusters
• geographic concentrations of interconnected companies
and industries
• Access to:
• employees
• suppliers
• specialized information
• complementary products
Where do we start looking for strengths and
weaknesses so we can create a sustainable
competitive advantage?

Value Chain Analysis


Corporate Value Chain
Corporate value chain analysis

• Examine each product line’s value chain


• Core competencies (strengths) & core deficiencies (weaknesses)

• Examine the “linkages” within each product line’s value chain


• Connections between the way one value activity is performed and
the cost of performance of another activity

• Examine the synergies among the value chains of different


product lines or business units
• Economies of scope
Scanning functional resources and capabilities
• Organizational structure: basic, functional, divisional
• Organizational culture
• Strategic issues
• Marketing: segmentation, positioning, 4P
• Financial: Financial leverage, Capital budgeting
• R&D: R&D Intensity, Technological Competence, Technology Transfer
• Operation
• HR: Increasing use of teams, Union relations, Temporary workers,
Quality of work life, Human diversity
• MIS
Sustainability at Unilever - The Value Chain youtube.com/watch?v=cpYhgqPRivw
Internal Factor Analysis Summary Table

19

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