Week 1 Addendum The challenge of the internal analysis is not being honest in identifying what the firm’s core competencies are and selecting resources and capabilities that do not yield a competitive advantage. Functional Areas Capabilities Examples of Firms Distribution Effective use of logistics management techniques Wal-Mart Human Resources Motivating, empowering, and retaining employees Microsoft Corp. Management Information Systems Effective and efficient control of inventories through point-of-purchase data collection methods Wal-Mart Marketing Effective promotion of brand-name products Gillette Co. Polo Ralph Lauren Corp. McKinsey & Co. Effective customer service Nordstrom Inc. Solectron Corporation Norrell Corporation Innovative merchandising Crate & Barrel Management Ability to envision the future of clothing Gap Inc. Effective organizational structure PepsiCo Manufacturing Design and production skills yielding reliable products Komatsu Product and design quality Gap Inc. Miniaturization of components and products Sony Research & Development Innovative technology Development of sophisticated elevator Caterpillar Otis Elevator Co. control solutions Digital technology Thomson Consumer Electronics The Four Criteria of Sustainable Competitive Advantage Valuable Capabilities • Helps a firm neutralize threats or exploit opportunities Rare Capabilities • Are not possessed by many others Costly-to-Imitate Capabilities • Historical: A unique and valuable organizational culture or brand name • Ambiguous cause: The causes and uses of a competence are unclear • Social complexity: Interpersonal relationships, trust, and friendship among managers, suppliers, and customers Nonsubstitutable Capabilities • No strategic equivalent

 
 

Week 1 Addendum
The challenge of the internal analysis is not being honest in identifying what the firm’s core competencies are and selecting resources and capabilities that do not yield a competitive advantage.

 

 

 

 

 

 

 

 

 

 

 

 

Functional Areas Capabilities Examples of Firms
Distribution Effective use of logistics management techniques Wal-Mart
Human Resources Motivating, empowering, and retaining employees Microsoft Corp.
Management Information Systems Effective and efficient control of inventories through point-of-purchase data collection methods Wal-Mart
Marketing Effective promotion of brand-name products Gillette Co.

Polo Ralph Lauren Corp.

McKinsey & Co.

  Effective customer service Nordstrom Inc.

Solectron Corporation

Norrell Corporation

  Innovative merchandising Crate & Barrel
Management Ability to envision the future of clothing Gap Inc.
  Effective organizational structure PepsiCo

 

Manufacturing Design and production skills yielding reliable products Komatsu
  Product and design quality Gap Inc.
  Miniaturization of components and products Sony
Research & Development Innovative technology

Development of sophisticated elevator

Caterpillar

Otis Elevator Co.

  control solutions  
  Digital technology Thomson Consumer Electronics

 

 

“…are the essence of what makes an organization unique in its ability to provide value to customers.”

Leonard-Barton, Bowen, Clark, Holloway & Wheelwright

 

McKinsey & Co. recommends identifying three to four competencies to use in framing strategic actions.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Four Criteria of Sustainable Competitive Advantage
Valuable Capabilities · Helps a firm neutralize threats or exploit opportunities
Rare Capabilities · Are not possessed by many others
Costly-to-Imitate Capabilities · Historical: A unique and valuable organizational culture or brand name

· Ambiguous cause: The causes and uses of a competence are unclear

· Social complexity: Interpersonal relationships, trust, and friendship among managers, suppliers, and customers

Nonsubstitutable Capabilities · No strategic equivalent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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