Assignment for Session 5
 H&W Ch 4; Ch 5, Sections 5.1, 5.2, 5.3
 Value chain item in Reading Packet!
 Preparation questions/tasks
 Describe the resource-based view of the firm?
 What is its purpose?
 What is the process for doing a resource-based
analysis?
 What are Southwest’s core competencies?
 What are Southwest’s distinctive competencies?
Are they sustainable?
 Analyze the cells in the internal value chain.
Identify strengths and weaknesses.
Strategic Management
Searching for strengths &
weaknesses
1
Session 5: Searching for strengths
& weaknesses
 Development of Opportunities and Threats
 Environmental analysisAreas of
concernIssues and prioritiesO & T
 Industry analysis (Porter model)Areas of
concernO & T
 Development of Strengths & Weaknesses
 Resource-based analysisS & W
 Value chain analysisS & W
 Business strategies
Strategic Management
Searching for strengths &
weaknesses
2
Searching for strengths and
weaknesses: Internal Analysis
Conclusions from Porter industry analysis
Competencies & resource-based analysis
Value-chain analysis
Scanning internal resources
Strategic
Management
Searching for strengths &
weaknesses
3
Industry Analysis (Porter)
Other
Stakeholders
Suppliers
Strategic Management
Relative
Power of
Unions,
Government,
Etc.
Potential
Entrants
Threat of
New Entrants
Industry
Competitors
Bargaining
Power
Of Buyers
Buyers
Bargaining Rivalry Among
Existing Firms
Power
Of Suppliers
Threat of Substitute
Products or Services
Searching
for strengths &
Substitutes
weaknesses
4
Wrapping up from last session
Identifying Opportunities and Threats
using Porter’s industry analysis model
What opportunities &
threats does Porter’s
analysis lead to?
 Buyers power
 Suppliers power
 Other stakeholders
power
 Substitutes—alternative
ways to satisfy need
 Rivalry among existing
firms
 Potential new entrants
Strategic Management
 Opportunities



 Threats



Searching for strengths &
weaknesses
5
Three approaches to internal
analysis
Focus on competencies & resources
Focus on the value chain
Scanning internal resources
Strategic
Management
Searching for strengths &
weaknesses
6
Competencies—a path to
competitive advantage
 Core competencies: things the organization
can do exceedingly well
 Distinctive competencies: core
competencies that are superior to the
competition
 Sustainability of distinctive competencies
depends on
 Durability
 Imitability: transparency, transferability, and
replicability
Strategic Management
Searching for strengths &
weaknesses
7
What strengths and weaknesses are
revealed by this analysis?
Resource-based analysis
 Identify resources/capabilities in terms of strengths &
weaknesses
 Identify core competencies, things they can do very
well
 Identify distinctive competencies, things they do better
than competition (competitive edge)
 Assess sustainability:
 durability
 imitability
(transparency, transferability, replicability)
 Identify capability/resource gaps
 Define strategies
 Define plans to address resource/capability gaps
Strategic Management
Searching for strengths &
weaknesses
Apply the resource-based
approach to determine the8
firm’s competitive advantage.
Firm’s value chain
 Shows how inputs are converted to
outputs
 Processes by which the firm adds
value
”Differences among competitor value chains
are a key source of competitive
advantage.” Porter
Strategic Management
Searching for strengths &
weaknesses
9
Value chain analysis of the firm
 Examines internal operations to
understand which parts add value
 Only value-adding parts contribute to
above average returns (profits)
 Seeks to identify multiple means to
implement chosen business strategy
See Nordstrom’s example
Strategic Management
Searching for strengths &
weaknesses
10
Which cells are strong?
What strengths and weaknesses are
revealed by this analysis?
Which are weak?
Which offer competitive opportunities?
Support
Activities
The internal value chain
Firm infrastructure
Human resource management
Technology Development
Procurement
MarketOutServing
Inbound Operabound
ice
Logistics tions
and
Logistics
sales
Strategic Management
Searching for strengths &
weaknesses
Primary Activities
11
STRENGTHS – S
OPPORTUNITIES – O
THREATS - T
Strategic Management
SO STRATEGIES
ST STRATEGIES
Searching for strengths &
weaknesses
WEAKNESSES - W
WO STRATEGIES
WT STRATEGIES
12
Scanning internal resources—
explanation and approach
An internal search for S&W
weaknesses--See Appendix 11C
 Financial, physical, human assets
 Ability to use these assets effectively
 Particular knowledge and expertise
Evaluate internal resources
 Against past performance
 Against competitors
 Against industry
What strengths and weaknesses are
revealed by this analysis?
Strategic Management
Searching for strengths &
weaknesses
13
Functional strategy
 Approach a function takes to support
and achieve business strategies
&objectives
 The path chosen to define and assure
effectiveness of the function
Strategic Management
Searching for strengths &
weaknesses
14
I: Assignment for Session 6


H&W Ch 5, Section 5.4 Business
Strategies
the development of each strategy cell,
e.g., SO, WO, ST, WT.



WEAKNESSES - W
For Southwest, Amazon, or Costco, illustrate



STRENGTHS – S
State S and O
State SO strategy that follows from the S
and O
Include results in a SWOT slide
Repeat above steps for WO, ST, and WT. A
different firm can be used for each, but be
sure to identify the firm.
Submit a paper copy of your work
OPPORTUNITIES – O
THREATS - T
Strategic Management
SO STRATEGIES
ST STRATEGIES
WO STRATEGIES
WT STRATEGIES
Searching for strengths &
weaknesses
13
Individuals: be prepared to use the value
chain model and distinctive competency
concepts to justify the strategy stated.
Strategic Management
Searching for strengths &
weaknesses
15
Generating strategic alternatives
 Analyze your




S
W
O
T
 To set strategies




SO
WO
ST
WT
Strategic Management
O
OPPORTUNITIIES
S
W
STRENGTHS
WEAKNESSES
SO
WO
STRATEGIES
STRATEGIES
T
ST
WT
THREATS
STRATEGIES
STRATEGIES
Searching for strengths &
weaknesses
16