Performance
Results
Competitive
Advantage
Distinctive
Organizational
Capabilities
Organizational
Resources
Organizational
Capabilities
Core
Competencies
• Process of evaluating organizations
resources and capabilities
• Why?
– “In order to formulate appropriate and
effective strategies you have to know what an
organization can and cannot do well, and
what assets it has or does not have”
Performance
Results
Competitive
Advantage
Distinctive
Organizational
Capabilities
Organizational
Resources
Organizational
Capabilities
Core
Competencies
• Resources are useless on their own
• Organizational Capabilities – various routines
and process that transforms resources into
outputs
• Organizational Routines and Processes –
Regular, predictable, and sequential work
activities done by organizational members
• Capabilities involve interactions between
people, people, and resources.
• Must get right combination and routines down
• Can’t just gather resources! Have to use them
properly!
• Dynamic Capabilities
– An organizations ability to build, integrate and
reconfigure capabilities to address rapidly changing
environments
Performance
Results
Competitive
Advantage
Distinctive
Organizational
Capabilities
Organizational
Resources
Organizational
Capabilities
Core
Competencies
• Any major value-creating capabilities
organizations have that are essential to their
business are as core competencies
• Enhance organizations capabilities
• Special and unique
capabilities that
distinguish an
organization from its
competitors
• Disney Distinct
Capabilities
– Theme parks that offer
rides, entertainment,
food, onsite lodging
and packages.
– These are things
traditional theme parks
do not offer.
Performance
Results
Competitive
Advantage
Distinctive
Organizational
Capabilities
Organizational
Resources
Organizational
Capabilities
Core
Competencies
• Contributes to superior customer service
• Can be used in a variety of ways
Performance
Results
• Is difficult for competitors to imitate
Competitive
Advantage
Distinctive
Organizational
Capabilities
Organizational
Resources
Organizational
Capabilities
Core Competencies
Performance
Results
Competitive
Advantage
Distinctive
Organizational
Capabilities
Organizational
Resources
Organizational
Capabilities
Core
Competencies
• Competitive
advantage sets
organization apart
from others
• Affects performance
results positively
• Strengths: Resources and capabilities
developed into sustainable competitive
advantage
• Weaknesses: Resources and capabilities that
are lacking or deficient and prevent the
organization from developing sustainable
competition
Value Chain
Internal Audit
• Capabilities Profile
• Systematic way of examining all the
organizations functional activities and how well
they create customer value
• A thorough assessment of an organizations
internal areas
– Assess resources and capabilities from all
perspectives
– Determine what company is capable of and what it is
not capable of.
• Organizational
Functions
–
–
–
–
–
Production-Operations
Marketing
Financial-Assets
Management
Info Systems
• Organizational
Elements
– Strategic Management
– Organizational
Structure
– Organizational Culture
Step 1
• Prepare current product-market profile
• Identify sources of competitive advantage and disadvantage in main
product-market segments
Step 2
Step 3
• Describe all the organizational capabilities and competencies
• Sort the core capabilities and competencies according to strategic
importance
Step 4
Step 5
• Identify and agree on the key capabilities and competencies
• Internal Analysis reflects strengths and weaknesses
Comparison
Against
Competitors
Specific Goals or
Targets
Are
Organizational
resources and
capabilities
strengths or
weaknesses?
Past Performance
Trends
Personal
Opinions of
Strategic
Decision Makers
or Consultants
• Compare capabilities
to see how you stack
up.
• Public information
– Forbes, Fortune
– Marketing reports
• Grey Zone
– Borderline Criminal
– Trash, spying
• Only way to identify
strengths and
weaknesses
• Needed for making
good strategic
decisions