Analyzing Resources & CapabilitiesPowerPoint PresentationRationale for the Resource-based Approach to StrategyThe Evolution of Honda Motor CompanySlide 5Slide 6Slide 7Eastman Kodak’s DilemmaSlide 9Appraising ResourcesFirms with the Highest Ratios of Market Value to Book ValueThe World’s Most Valuable Brands, 2003Identifying Organizational Capabilities: A Functional ClassificationThe Value Chain: The McKinsey Business SystemThe Porter Value ChainSlide 16Slide 17A Hierarchy of Capabilities: A Telecom ManufacturerThe Rent-Earning Potential of Resources and CapabilitiesSlide 20Appraising VW’s Resources and CapabilitiesAppraising the Capabilities of a Business SchoolAmoco’s Appraisal of Organizational CapabilitiesDistinctive Capabilities as a Consequence of Childhood ExperiencesSlide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Analyzing Resources & CapabilitiesAnalyzing Resources & Capabilities•The role of resources and capabilities in strategy formulation.•The resources of the firm•Organizational capabilities•Appraising the profit potential of resources and capabilities •Creating new capabilities.OUTLINETHE FIRMGoals and ValuesResources andCapabilitiesStructure and SystemsTHE INDUSTRYENVIRONMENT•Competitors•Customers•SuppliersSTRATEGYSTRATEGYThe Firm-Strategy InterfaceTheEnvironment-Strategy InterfaceShifting the Focus of Strategy Analysis:From the External to the Internal EnvironmentShifting the Focus of Strategy Analysis:From the External to the Internal EnvironmentRationale for the Resource-based Approach to StrategyRationale for the Resource-based Approach to Strategy•When the external environment is subject to rapid change, internal resources and capabilities offer a more secure basis for strategy than market focus.•Resources and capabilities are the primary sources of profitability1946 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000HondaTechnicalResearchInstitutefounded1st motorcycle:98cc, 2-cycleDream D4 cycle engine405ccmotorcyclePower products:ground tillers, marineengines, generators,pumps, chainsawssnowblowersFirst product: Model Aclip-on enginefor bicyclesThe 50ccSupercubN360 minicar1000ccGoldwingtouringmotor cycleAcura CardivisionCompetes inIsle of Man TTmotorcycleraces4-cylinder750ccmotorcyclePortablegeneratorEnters Formula 1Gran Prix racingHondaCivicEnters Indycar racing1st gasoline-poweredcar to meet US LowEmission Vehicle StandardCivic GS(naturalgaspowered)Civic Hybrid(dual gasoline/electric)Home co-generationsystemHonda FCXfuel cellcar The Evolution of Honda Motor Company The Evolution of Honda Motor CompanyPrecision MechanicsFine OpticsMicro-Electronics35mm SLR cameraCompact fashion cameraEOS autofocus cameraDigital cameraVideo still cameraPlain-paper copierColor copierColor laser copier Laser copierBasic faxLaser faxMask alignersExcimer laser alignersStepper alignersInkjet printerLaser printer Color video printerCalculatorNotebook computerCanon: Products and Core Technical CapabilitiesCanon: Products and Core Technical CapabilitiesLinks between Products & Capabilities: Capability-Based Strategy at 3MCarborundumminingCarborundumminingSandpaperSandpaperScotchtapeScotchtapeRoad signs& markingsRoad signs& markingsPost-it notesPost-it notesAudio tapeAudio tapeSurgical tapes& dressingsSurgical tapes& dressingsVideotapeVideotapeAcetate filmAcetate filmFloppy disks & data storage productsFloppy disks & data storage productsPharmaceuticalsPharmaceuticalsHousewares/kit-chen productsHousewares/kit-chen productsAbrasivesAbrasivesAdhesivesAdhesivesNew-productdevelopment &introduction New-productdevelopment &introduction Thin-film technologiesThin-film technologiesPRODUCTSPRODUCTSCAPABILITIESCAPABILITIESMaterials sciencesMaterials sciencesHealth sciencesHealth sciencesMicroreplicationMicroreplicationFlexiblecircuitryFlexiblecircuitryCarborundumminingCarborundumminingSandpaperSandpaperScotchtapeScotchtapeRoad signs& markingsRoad signs& markingsPost-it notesPost-it notesAudio tapeAudio tapeSurgical tapes& dressingsSurgical tapes& dressingsVideotapeVideotapeAcetate filmAcetate filmFloppy disks & data storage productsFloppy disks & data storage productsPharmaceuticalsPharmaceuticalsHousewares/kit-chen productsHousewares/kit-chen productsAbrasivesAbrasivesAdhesivesAdhesivesNew-productdevelopment &introduction New-productdevelopment &introduction Thin-film technologiesThin-film technologiesPRODUCTSPRODUCTSCAPABILITIESCAPABILITIESMaterials sciencesMaterials sciencesHealth sciencesHealth sciencesMicroreplicationMicroreplicationFlexiblecircuitryFlexiblecircuitryEvolution of Capabilities and Products: 3MEvolution of Capabilities and Products: 3MEastman Kodak’s Dilemma1980’s1990’sResources & Capabilities BusinessesChemical Imaging•Organic Chemistry•Polymer technology•Optomechtronics•Thin-film coatingsBrandsGlobal DistributionFilmCamerasDIVESTS: Eastman Chemical, Sterling Winthrop, DiagnosticsNeed to build digital imaging capabilityDigital Imaging Products (e.g. Photo CD System; Advantix cameras & film Fine ChemicalsPharmaceuticalsDiagnosticsSTRATEGYINDUSTRY KEYSUCCESS FACTORSCOMPETITIVEADVANTAGEORGANIZATIONALCAPABILITIES RESOURCESTANGIBLE INTANGIBLE HUMAN •Financial•Physical•Technology•Reputation•Culture •Skills/know-how•Capacity for communication & collaboration•MotivationThe Links between Resources, Capabilities and Competitive AdvantageThe Links between Resources, Capabilities and Competitive AdvantageAppraising ResourcesAppraising ResourcesRESOURCE CHARACTERISTICS INDICATORS Financial Borrowing capacity Debt/ Equity ratioInternal funds generation Credit ratingTangible Net cash flowResources Physical Plant and equipment: Market value of size, location, technology fixed assets.flexibility. Scale of plantsLand and buildings. Alternative uses forRaw materials. fixed assets Technology Patents, copyrights, know how No. of patents ownedR&D facilities. Royalty incomeIntangible Technical and scientific R&D expenditureResources employees R&D staff Reputation Brands. Customer loyalty. Company Brand equityreputation (with suppliers, customers, Customer retentiongovernment) Supplier loyaltyHuman Training, experience, adaptability, Employee qualifications,Resources commitment and loyalty of employees pay rates, turnover.Firms with the Highest Ratios of Market Value to Book ValueFirms with the Highest Ratios of Market Value to Book ValueAccenture