Ch3-,*,Chapter 3,The Internal Environment:,Resources,Capabilities and,Core Competencies,Michael A.Hitt,R.Duane Ireland,Robert E.Hoskisson,2000 South-Western College Publishing,Chapter 2,External Environment,What the Firm,Might,Do,Chapter 3,Internal Environment,What the Firm,Can,Do,Sustainable,Competitive,Advantage,SWOT Analysis,Strengths,Weaknesses,Opportunities,Threats,The purpose of SWOT Analysis,It is an easy-to-use tool for developing an overview of a companys strategic situation,It forms a basis for matching your companys strategy to its situation,Strengths,A STRENGTH is something a company is good at doing or a characteristic that gives it an important capability.,Possible Strengths:,Name recognition,Proprietary technology,Cost advantages,Skilled employees,Loyal Customers,Weaknesses,A WEAKNESS is something a company lacks or does poorly(in comparison to others)or a condition that places it at a disadvantage,Possible Weaknesses:,Poor market image,Obsolete facilities,Internal operating problems,Poor marketing skills,Strengths and Weakness form a basis for INTERNAL analysis,By examining strengths,you can discover untapped potential or identify distinct competencies that helped you succeed in the past.,By examining weaknesses,you can identify gaps in performance,vulnerabilities,and erroneous assumptions about existing strategies.,Resources,*,Tangible,*,Intangible,Capabilities,Teams of,Resources,Sources of,Core,Competencies,Competitive,Advantage,Strategic,Competitiveness,Above-Average,Returns,Competitive,Advantage,Gained through,Core Competencies,Discovering,Core,Competencies,Discovering Core Competencies,Criteria of,Sustainable,Advantages,Value,Chain,Analysis,Valuable,Rare,Costly to Imitate,Nonsubstitutable,*,*,*,*,*,Outsource,How do we assemble,bundles,of Resources,Capabilities and Core Competencies to create,VALUE,for customers?,Will environmental changes make our core competencies obsolete?,And.,Are substitutes available for our core competencies?,Are our core competencies easily imitated?,Key Questions for Managers,in Internal Analysis,Resources,*,Tangible,*,Intangible,Discovering Core Competencies,What a firm has to work with:,its,assets,including its,people,and the value of its,brand name,What a firm,Has,.,Resources,Resources represent,inputs into a firms production process,.,such as capital equipment,skills of employees,brand names,finances and talented managers,What a firm,Has,.,What a firm has to work with:,its assets,including its people and the value of its brand name,Resources,What a firm has to work with:,its assets,including its people and the value of its brand name,Resources represent inputs into a firms production process.,such as capital equipment,skills of employees,brand names,finances and talented managers,“Some genius invented the Oreo.Were just living off the inheritance.”,F.Ross Johnson,Former President&CEO,RJR Nabisco,What a firm,Has,.,Resources,Tangible Resources,Financial,*,Physical,*,Human Resources,*,Organizational,*,What a firm,Has,.,What a firm has to work with:,its assets,including its people and the value of its brand name,Resources represent inputs into a firms production process.,such as capital equipment,skills of employees,brand names,finances and talented managers,Intangible Resources,Technological,*,Innovation,*,Reputation,*,“Some genius invented the Oreo.Were just living off the inheritance.”,F.Ross Johnson,Former President&CEO,RJR Nabisco,Resources,Resources,*,Tangible,*,Intangible,Capabilities,Teams of,Resources,Discovering Core Competencies,What a firm,Does,.,Capabilities represent:,the firms capacity or ability to,integrate individual firm resources,to achieve a desired objective.,Capabilities,What a firm,Does,.,Capabilities develop over time as a result of,complex interactions,that take advantage of the,interrelationships,between a firms,tangible and intangible resources,that are based on the development,transmission and exchange or sharing of information and knowledge as carried out by the firms employees.,Capabilities represent:,the firms capacity or ability to integrate individual firm resources to achieve a desired objective.,Capabilities,What a firm,Does,.,Capabilities represent:,the firms capacity or ability to integrate individual firm resources to achieve a desired objective.,Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firms tangible and intangible resources that are based on the development,transmission and exchange or sharing of information and knowledge as carried out by the firms employees.,Capabilities become important when they are combined in,unique combinations,which create core competencies which have,strategic value,and can lead to,competitive advantage,.,Capabilities,Resources,*,Tangible,*,Intangible,Capabilities,Teams of,Resources,Discovering Core Competencies,Sources of,Core,Competencies,Competitive,Advantage,Discovering,Core,Competencies,What a firm,Does,.,that