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Chapter3 TheInternalEnvironment Resources CapabilitiesandCoreCompetencies MichaelA HittR DuaneIrelandRobertE Hoskisson 2000South WesternCollegePublishing SWOTAnalysis StrengthsWeaknessesOpportunitiesThreats ThepurposeofSWOTAnalysis Itisaneasy to usetoolfordevelopinganoverviewofacompany sstrategicsituationItformsabasisformatchingyourcompany sstrategytoitssituation Strengths ASTRENGTHissomethingacompanyisgoodatdoingoracharacteristicthatgivesitanimportantcapability PossibleStrengths NamerecognitionProprietarytechnologyCostadvantagesSkilledemployeesLoyalCustomers Weaknesses AWEAKNESSissomethingacompanylacksordoespoorly incomparisontoothers oraconditionthatplacesitatadisadvantagePossibleWeaknesses PoormarketimageObsoletefacilitiesInternaloperatingproblemsPoormarketingskills StrengthsandWeaknessformabasisforINTERNALanalysis Byexaminingstrengths youcandiscoveruntappedpotentialoridentifydistinctcompetenciesthathelpedyousucceedinthepast Byexaminingweaknesses youcanidentifygapsinperformance vulnerabilities anderroneousassumptionsaboutexistingstrategies DiscoveringCoreCompetencies HowdoweassemblebundlesofResources CapabilitiesandCoreCompetenciestocreateVALUEforcustomers Willenvironmentalchangesmakeourcorecompetenciesobsolete And Aresubstitutesavailableforourcorecompetencies Areourcorecompetencieseasilyimitated KeyQuestionsforManagersinInternalAnalysis DiscoveringCoreCompetencies Whatafirmhastoworkwith itsassets includingitspeopleandthevalueofitsbrandname WhatafirmHas Resources Resourcesrepresentinputsintoafirm sproductionprocess suchascapitalequipment skillsofemployees brandnames financesandtalentedmanagers WhatafirmHas Whatafirmhastoworkwith itsassets includingitspeopleandthevalueofitsbrandname Resources Whatafirmhastoworkwith itsassets includingitspeopleandthevalueofitsbrandname Resourcesrepresentinputsintoafirm sproductionprocess suchascapitalequipment skillsofemployees brandnames financesandtalentedmanagers SomegeniusinventedtheOreo We rejustlivingofftheinheritance F RossJohnson FormerPresident CEO RJRNabisco WhatafirmHas Resources TangibleResources WhatafirmHas Whatafirmhastoworkwith itsassets includingitspeopleandthevalueofitsbrandname Resourcesrepresentinputsintoafirm sproductionprocess suchascapitalequipment skillsofemployees brandnames financesandtalentedmanagers IntangibleResources SomegeniusinventedtheOreo We rejustlivingofftheinheritance F RossJohnson FormerPresident CEO RJRNabisco Resources DiscoveringCoreCompetencies WhatafirmDoes Capabilities WhatafirmDoes Capabilitiesdevelopovertimeasaresultofcomplexinteractionsthattakeadvantageoftheinterrelationshipsbetweenafirm stangibleandintangibleresourcesthatarebasedonthedevelopment transmissionandexchangeorsharingofinformationandknowledgeascarriedoutbythefirm semployees Capabilities WhatafirmDoes Capabilitiesrepresent thefirm scapacityorabilitytointegrateindividualfirmresourcestoachieveadesiredobjective Capabilitiesdevelopovertimeasaresultofcomplexinteractionsthattakeadvantageoftheinterrelationshipsbetweenafirm stangibleandintangibleresourcesthatarebasedonthedevelopment transmissionandexchangeorsharingofinformationandknowledgeascarriedoutbythefirm semployees Capabilitiesbecomeimportantwhentheyarecombinedinuniquecombinationswhichcreatecorecompetencieswhichhavestrategicvalueandcanleadtocompetitiveadvantage Capabilities DiscoveringCoreCompetencies aretheessenceofwhatmakesanorganizationuniqueinitsabilitytoprovidevaluetocustomers Leonard Barton Bowen Clark Holloway Wheelwright McKinsey Co recommendsidentifyingthreetofourcompetenciestouseinframingstrategicactions CoreCompetencies DiscoveringCoreCompetencies Outsource ForastrategiccapabilitytobeaCoreCompetency itmustbe CoreCompetencies WhatafirmDoes thatisStrategicallyValuable CoreCompetenciesmustbe Nonsubstitutable Capabilitiesthatdonothavestrategicequivalents suchasfirm specificknowledgeortrust basedrelationships WhatafirmDoes thatisStrategicallyValuable CoreCompetencies Valuable Rare CostlytoImitate Capabilitiesthatotherfirmscannotdevelopeasily usuallyduetouniquehistoricalconditions causalambiguityorsocialcomplexity Capabilitiesthatarepossessedbyfew ifany currentorpotentialcompetitors Capabilitiesthateitherhelpafirmtoexploitopportunitiestocreatevalueforcustomersortoneutralizethreatsintheenvironment Outsource DiscoveringCoreCompetencies SupportActivities PrimaryActivities ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics Operations ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics Operations OutboundLogistics ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics Operations OutboundLogistics Marketing Sales ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics Operations OutboundLogistics Marketing Sales Service ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics Operations OutboundLogistics Marketing Sales Service Procurement ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities InboundLogistics Operations OutboundLogistics Marketing Sales Service Procurement TechnologicalDevelopment ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities TechnologicalDevelopment Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service HumanResourceManagement ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN MARGIN ValueChainAnalysis IdentifyingResourcesandCapabilitiesThatCanAddValue SupportActivities PrimaryActivities Outsourcing TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN MARGIN StrategicChoicetoPurchaseSomeActivitiesFromOutsideSuppliers SupportActivities PrimaryActivities TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN InboundLogistics Operations OutboundLogistics Service Marketing Sales TechnologicalDevelopment HumanResourceManagement Procurement MARGIN Firmsoftenpurchaseaportionoftheirvalue creatingactivitiesfromspecialtyexternalsupplierswhocanperformthesefunctionsmoreefficiently Outsourcing StrategicChoicetoPurchaseSomeActivitiesFromOuts

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