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global strategy management

part 2

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12 views16 pages

global strategy management

part 2

Uploaded by

xoson56666
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Resources

Resources: the tangible and intangible assets a


firm uses to choose and implement its strategies
• Tangible – observable and quantifiable
– Financial resources
– Physical resources
– Technological resources
• Intangible – difficult to quantify
– Human resources & capabilities
– Innovation resources
– Reputational resources
Resources, Capabilities & the Value Chain
Value Chain- Goods and services produced through a
chain of vertical activities that add value
Value Chain
• Set of activities performed in a specific way in
order to deliver a final product to market. May
help firm identify where they add value.
Raw Materials Additional Final Final Product
R&D Marketing
(inputs) Components Assembly (Output)

Primary Activities
Support Activities

• Ex. Nike http://www.nikeresponsibility.com/how/value/plan


Value Chain - Starbucks
• Primary Activities
– Inbound logistics – Selecting coffee beans,
strategic partnerships, quality standards
– Operations - Direct/licensed stores
– Outbound logistics – some sales through
alternative retailers (grocers etc.)
– Marketing and Sales – new product launches,
sampling
– Service – provide “Starbucks experience” though
quality customer service
Value Chain - Starbucks
• Support Activities
– Infrastructure - This includes all departments like
management, finance, legal, etc
– Human Resource Management – training programs,
generous benefits and incentives
– Technology Development – with both coffee related
processes and to connect to customers.
– Procurement - company agents travel to establish
strategic relationships and purchase beans directly
Value Chain - Outsourcing
A Decision Model in Value Chain Analysis
Outsourcing
Defined as turning over all or part of an activity to an outside supplier to
improve the performance of the focal firm.

Pros Cons
Lower prices for consumers Nurtures rivals
Lower costs for firms Loss of internal jobs
Firms can specialize – focus on core Exploitation of workers/environment
competencies

Types of outsourcing?
Types of Outsourcing
• Offshoring – outsourcing to an international or
foreign firm
• On-shoring/in-shoring – outsourcing to a
domestic firm
• Captive sourcing – setting up subsidiaries
abroad. Location is foreign, but work is in-
house.
Nike – offshores 100% of production
Outsourcing - Nike
• Employs 26,000 American workers vs.
• >+ 1 million contract workers
– 90% of which are in Asia
– Nike accused of exploiting low-wage workers

– If production took place in the US the cost per pair


of shoes would increase by $100
– https://www.youtube.com/watch?v=M5uYCWVfuPQ
– https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html
VRIO Framework
• A resource-based framework that focuses on
the value, rarity, imitability and organizational
aspects of firm’s resources and capabilities.

• V – Value
• R – Rarity
• I – Imitability
• O - Organizational
VRIO Framework
• Only value-adding resources lead to competitive advantage

Source http://www.business-to-you.com/vrio-from-firm-resources-to-competitive-advantage/
VRIO Framework
Value & Rarity
Value: do the resources and capabilities add
value?
• Necessary for a competitive advantage
Rarity: how rare are the valuable resources and
capabilities?
• Valuable, but common = parity, not advantage
• Valuable and rare can lead to temporary advantage
• If everyone has it, you can’t make money from it
The VRIO Framework: Imitability
 Easier to imitate tangible resources/capabilities than intangible ones
 Why is imitation so difficult?
 Hard to acquire in a short time what competitors have developed over a long
time
 Events earlier in time affect future events
 Difficult to identify causal determinants of performance
 Valuable, rare, but imitable resources/capabilities = temporary advantage
 Only valuable, rare and hard-to-imitate resources/capabilities = sustained
competitive advantage.
 Causal Ambiguity- link between the resources controlled by the firm is not fully
understood. Competitors unable to duplicate.

 Social Complexity- combination of firm’s social network, it’s corporate culture,


relationship and reputation among customers, suppliers and governmental
institutions.
The VRIO Framework: Organization
 The Question of Organization
– How is a firm organized to develop and leverage the full
potential of its resources and capabilities?
 Using complementary assets effectively
 Managing social complexity effectively
 Invisible relationships can add value - make imitation more difficult
 Strong firm resources and capabilities especially useful in overcoming
challenges in foreign locations
 What about those firms that may not have historical or
reputational capabilities?
The Savvy Strategist
• Lessons from the VRIO framework
– Task for strategists - build firm strengths by identifying, developing,
and leveraging resources/capabilities
– Imitation is not likely to be a successful strategy
– Sustained competitive advantage will not last forever
– Firms should try to develop “strategic foresight”

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