Threats And Opportunities From Site
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Threats to sustainability
Imitation or substitution
Market entry
Powerful buyers and suppliers
Unpredictable changes in external environment
Factors beyond a firms control (bad luck)
Limitations of the RBV
Presented as static concept – however, many firms need to be able to cope with turbulent environments
Suggests that managers may have limited ability to create sustained competitive advantages (empirical support by “perpetually failing firms” – firms that consistently earn normal or below-normal returns
Difficult to test empirically – data problem (at the level of the unit of analysis, Le., resources and capabilities)
What is the appropriate level of analysis? How deeply does one have to look?
Principles of capabilities-based competition
Goal : Build difficult-to-imitate organizational capabilities that distinguish a company from its competitors
Principles :
o The building blocks of strategy are business processes
o The transformation of processes into valuable strategic capabilities is a key to success
o Capabilities are created by making strategic investments in support infrastructure
o CEO must be responsible, because competing on capabilities involves cross-functionality
Some lessons learned from the capabilities perspective
A capability begins and ends with the customer (or supplier)
The longer and more complex the string of business processes, the harder it is to transform into a capability or to duplicate or imitate
Outsourcing can be dangerous
A strategy for growth : Transfer essential business processes to New geographic areas (e.g., Wal-Mart) or to New businesses (e.g., Honda)
There is a difference between capabilities and core competencies
Core competencies
Coordinate diverse production skills and integrate multiple streams of technology
Are communication, involvement, and a deep commitment to working across organizational boundaries
Do not diminish with use, but are enhanced as they are applied and shared
Are the glue that binds existing businesses
Are difficult to imitate, especially if they are a complex harmonization of individual technologies and production skills
Are corporate resources and may be reallocated by corporate management
Tests to identify core competence