Strategic Management Process Strategic Analysis External Analysis Internal

Strategic Management Process Strategic Analysis External Analysis Internal Analysis Strategy Vision/Mission Objectives/G oals Arena Vehicle Differentiation Staging Economic Logic Supporting Organizational Arrangements Hambrick & Fredrickson (2001)

Bundles…. Bundles. . ! Resources COMPETITIVE ADVANTAGE CORE COMPETENCIES CAPABILITIES RESOURCES (TANGIBLE & INTANGIBLE) Tangible Easily observable and quantifiable Intangible Difficult to account for or imitate Deep in firm’s history Accumulate over time

Tangible Resources Easy to identify and quantify Financial resources Firm’s cash accounts Firm’s capacity to raise equity Firm’s borrowing capacity Physical resources Modern plant and facilities Favorable manufacturing locations State-of-the-art machinery and equipment Technological resources Legally protected trade secrets Standardized production processes Patents, copyrights, trademarks Organizational resources Formal evaluation and control systems Formal reporting structure

Intangible Resources Difficult to account for or imitate Human Resources Experience and capabilities of employees Trust built over the years Managerial skills Firm-specific practices and procedures (non-codified) Innovation and creativity Technical and scientific skills Innovation capacities Reputation Brand name Reputation with customers Reputation with suppliers

Capabilities and Core Competencies or skills to transform inputs to outputs Emerge over time through complex interactions among resources Scientists/Engineers Some capabilities become core competencies Financial Resources But, not all capabilities are competencies. Research Labs Now, discover core competencies…. Patents R&D Capability History of Success

Frameworks for Capability Discovery a. VRIN Criteria b. Value Chain Analysis

In a nutshell…. Valuable: Neutralize threats and exploit opportunities Rare: Not many firms possess Inimitable: Historical/Cultural, Causal Ambiguity, and Social Complexity Non-substitutable: No equivalent strategic resources or capabilities

Support Activities General Management Finance Human Resources MIS Customer Value In-bound Logistics Operations Out-bound Logistics Primary Activities Marketing/Sales Follow-Up Service

Where are the competencies? Design Sourcing/Procure ment Manufacturing and Assembly Inventory Management/Dist ribution (online) Store Operations and Sales Service Fulfillment Customer Use/Support Warby Parker Value Chain Design Sourcing/Procure ment Manufacturing and Assembly Inventory Management/Dist ribution Other Eyewear Manufacturers Design Sourcing/Procure ment Manufacturing and Assembly Inventory Management/Dist ribution Typical Brick-n-Mortar Eyewear Retailers

In-bound logistics Capabilities Effective sourcing strategies for raw materials and some assembly VRIN? VRIN Needs for Improvement Reducing inventory and delivery cost Priority (H, M, L) Resource ? (Y, N) H N Priority (H, M, L) Resource ? (Y, N) (Online) Store Operations/Sales Capabilities VRIN? Needs for Improvement Effective use of logistics mgmt for sample delivery and purchase VRIN Shortening delivery days (5 to 3) H Y Effective in-store customer service VR Providing eye-exam service M N Innovative merchandising VR Enhancing luxury images H Y