Strategic case method
1. Prepare strategic profile
2. Strategic analysis
Internal
External
Value chain
Industry profile
VRIO
Porter’s five forces
Core competencies
Strategic groups
Financial analysis
Competitor profiles
3. Identify strategic issues
4. Craft & evaluate strategic options
5. Prepare action plans for recommended
strategy
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The Key Points
0 value-creation inside an organisation
1 Resource-based View: tangible and intangible resources, capabilities, and how capabilities are developed the VRIN criteria used to determine whether resources and capabilities are core competencies
2 The Value Chain Analysis to identify and
evaluate resources and capabilities
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Tools for Internal Analysis
Value Chain (Porter, 1985)
VRIO (Resource Based View of Firm) (J.
Competitive advantage and value creation Competitive advantage is a firm’s ability to
outperform its competitors
The source of competitive advantage is
superior value creation
To create superior value a company must
lower its costs and/or differentiate its product so it can charge a higher price.
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Value creation per unit: cost advantage /differentiation
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The roots of competitive advantage
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Generic building blocks of competitive advantage
Superior efficiency – allows a company to
lower its costs
Superior quality – allows it to both charge a
higher price and lower its costs
Superior customer service – allows it to
charge a higher price
Superior innovation – can lead to higher
prices (e.g. product innovations) or lead to lower unit costs (e.g. process innovations).
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The value-chain
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VALUE CHAIN ACTIVITIES
not?
Primary activities
Inbound
Support activities logistics
Procurement
Operations
Technology
Outbound
development logistics
HR
Marketing/sales management Service
General admin
The critical question to ask is:
Where is value being added – or
The value-creating potential of primary activities
Inbound logistics
activities, such as materials handling,
warehousing and inventory control, used to receive, store and disseminate inputs to a product. Operations
activities necessary to convert the inputs
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provided by inbound logistics into final product form machining, packaging, assembly and equipment maintenance are examples of operations activities.
The value-creating potential of primary activities (cont.)
Outbound logistics
activities involved with collecting, storing and
physically distributing the final product to customers examples of these activities include finishedgoods warehousing, materials handling and order processing.
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The value-creating potential of primary activities
(cont.)
Marketing and sales
activities completed to provide means
through which customers can purchase products and to induce them to do so
to market and sell products effectively, firms develop advertising and promotional campaigns, select appropriate distribution channels, and select, develop and support their sales force.
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The value-creating potential of primary activities
(cont.)
Service
activities designed to enhance or maintain a
product’s value
firms engage in a range of service-related activities, including installation, repair, training and adjustment.
Each activity should be examined
relative to competitors’ abilities.
Accordingly, firms rate each activity as superior, equivalent or inferior.
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Examining the value-creating potential of support activities
Procurement
activities needed to purchase the inputs to
produce a firm’s products.
Technological development
activities performed to improve a firm’s
product and the processes
technological development takes many forms, such as process equipment, basic research and product design, and servicing procedures.
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The value-creating potential of support activities Human resource management
activities involved with
