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BS_L06_Internal Business Environment Analysis
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Transcript of BS_L06_Internal Business Environment Analysis
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INTERN L BUSINESS
ENVIRONMENT N LYSIS
Prof.Dr.Dr.Dr.H.C. Constantin Bratianu
Facul ty of Bus iness Adm inis t rat ion
Academy of Econom ic Studies
Bucharest , Romania
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Strategic
Intention
Strategic
Analysis
Strategies
Elaboration
Strategies
Implementation
Strategic managementprocess
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Strategic Analysis
InternalEnvironment
Analysis
External
EnvironmentAnalysis
SWOT Analysis
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Internal Environment Analysis
Resources
-Tangible
- Intangible
Capabilities
CoreCompetencies
Finding
CoreCompetencies
Strategic
Advantage
Unique
Rare
Valuable
Costly toimmitate
Value ChainAnalysis
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Resources
Tangible resources
- Financial (money, borrowing capacity)
- Physical objects (buildings, equipments)
- Human resources (as physical bodies) Intangible resources:
- Human resources (experience, talent, intelligence)
- Explicit knowledge (documents)
- Structural capital
- Brands, symbols, company image
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Market/Book values
Company Market value
($ billions)
Book value
($ billions)
eBay 54.5 4.9
Intel 170.9 33.5
Microsoft 286.2 57.5
Nucor(Steel) 4.8 2.3
J.C.Penny 10.0 6.4
General
Motors
27.3 25.3
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Intellectual capital
Intellectual capital
Human capital
Structuralcapital
Customercapital
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Human capital
Information and knowledge at individual level
Thinking models, as cognitive approximations of the real
world in which we are living
Talent and creativity potential
Rational intelligence
Emotional intelligence
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Explicitknowledge
Tacit knowledgeTacit knowledge
Explicitknowledge
Combination
Socialization
InternalizationExternalization
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Socialization
It is a process of exchange of tacit knowledge betweentwo or more individuals.
The most difficult process since tacit knowledge is basedon sharing feelings, emotions, and experiences.
Individual face-to-face interaction is the only way to
capture the full range of physical sensations andemotional reactions that are necessary for transferring
tacit knowledge.
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Combination
This is the most used and practical mode for sharingexplicit knowledge between two or several individuals
It is based on rational arguments and verbal language
Knowledge flows from the individual with a higher levelof knowing toward the individual with a lower level ofknowing
Sharing knowledge is different than sharing tangiblethings, since there is no law of conservation
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Externalization
This is a process of transforming tacit knowledge intoexplicit knowledge
It is a transformation of knowledge taken from directexperience and from the non-rational mind and put it into
a rational way able of being explained using the verbal
language
For the Japanese companies this is a knowledgecreation process, which contributes significatly to theinnovation process
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Internalization
It is the reverse process by which explicit knowledge istransformed into tacit knowledge
This is very helpful in developing different skills and in
creating some control mechanisms
It is a process which goes from the organizationalknowledge to the individual knowledge, in order to
increase individuals understanding
It is a very useful process in developing organizationalculture and behavior
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Capabilities
Capability = Managerial capacity of usingefficiently given resources
Capabilities can be obtained by integrating in
time human resources, organizational structureand organizational knowledge
Examples:
- Microsoft employees motivation capability
- Walt Disney, 3M innovation capability
- Toyotajust in time process capability
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Core Competencies Core competency = any of the strengths that represent
unique skills or resources that can determine theorganizations competitive edge
Core competency = an integration of resources andcapabilities in a specific way in order to increasecompanys competitiveness
Any core competency is base on resources andcapabilities, but not any of these can become corecompetency
Finding core competencies: 4 criteria & chain valueanalysis
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The 4 criteria Uniqueness = A resource or capability which is
not to be found in the other companies
Rarity = A resource or capability ob being rare(Walt Disney talent and creativity)
Valuable = A resource or capability of being initself very valuable (Harvard Universityprofessors)
Imitation cost = the higher the imitation costs,the longer it takes to competitors to copy thecore competency
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VRINE Model
Value - Rarity - Inimitability Nonsubstitutability Exploitability
Value A resource or capability is valuable if it enables a firm to takeadvantage of opportunities or to fend off threats in its environment.
Does the resource or capability allow the firm to meet a marketdemand or protect the firm from market uncertainty?
If it is true, it satisfies the value requirement. Valuable resources areneeded in an industry, but value in itself does not convey anadvantage.
Union Pacific (UP) Railroad, for example, maintains an extensivenetwork of rails and equipment on the US Golf Coast (S-E). It has agreat value in any competition with others carriers.
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VRINE Model
Rarity Rarity is defined as scarcity relative to demand. Anotherwise valuable resource that isnt rare wont necessarily
contribute to competitive advantage.
Assuming that a resource or capability is valuable, is it scarcerelative to demand or is it widely possessed by competitors?
Valuable resources that are also rare contribute to a compet i t iveadvantage, but that advantage may be only temporary.
When McDonalds signs an agreement to build a restaurant insidea Wal-Mart store, it has an intangible location advantage overBurger King and Wendys that is not only valuable but also rare
because it has an exclusive right to that geographic space.
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VRINE Model
Inimitability and Nonsubstitutability A valuable and rare resource or capability will grant an
advantage only so long as competitors dont gain possession
of it or find a close substitute.
The criterion of inimitability is satisfied if competitors cannotfind a way to imitate or copy the product, or if there is a costbarrier to do it.
The criterion of nonsubstitutability is satisfied if a competitor
cannot achieve the same benefits using different combinationsor resources and capabilities.
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VRINE Model
Exploitability
The possession and control of a resource or capability isnecessary but not sufficient to gain a competitive advantage. Afirm must have the organizational capability to exploit it.
Although the issue is quite broad, the point is for the firm tohave the ability to get value out of any resource or capabilitythat it may generate.
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Chain value analysis
Human resources management
General administration
Energy systems
Information systems & technologies
MarketingOutputlogistics
Productionprocesses
Inputlogistics
Activitiesfor support
BasicActivities