an organization's assets and are thus the basic building blocks of the organization; include:

• tangible assets: such as its plant, equipment, finances, and location
• human assets: number of employees, their skills, and motivations
• intangible assets: such as technologies (patents/copyrights), culture, reputation

a corporations ability to exploit it resources; processes and routines to turn inputs into outputs; is functionally based and is resident in a particular function...marketing capabilities, manufacturing capabilities and HR management capabilities...

**when constantly being changed and reconfigured to make them more adaptive to an uncertain environment, they are called dynamic capabilities. 

a collection of competencies that crosses divisional boundaries, is widespread within the coporation, and is something that the corporation can do exceedingly well. Product development=ex.

**a company must continually reinvest in a core competency or risk its becoming a core rigidity or deficiency, that is , a strength that over time matures and may become a weakness. 

1. Value: does it provide customer value and competitive advantage

2. Rareness: Do no other competitors possess it?

3. Imitability: Is it costly for other to imitate?

4. Organization: Is the firm organized to exploit the resources?

**if all answers are yes=distinctive compentence

• the company's past performance
• the company's key competitors
• the industry as a whole

• It may be an asset endowment such as key patent
• it may be aquired from someone else
• it may be shared with another business unit or alliance partner
• it may be carefully built and accumulated over time within the company

1. Durability: the rate at which a firm's underlying resources, capabilities, or core competencies depreciate or become obsolete (due to new technologies)

2. Imitability: the rate at which a firm's underlying resources, capabilities, or core competencies can be duplicated by others. competitors range from reverse engineering to hiring employees from the competitor to outright patent infringements. Can be:

• Transparency-speed which other firms can understand the relationship of resources and cap supporting a successful firm's strategy.
• Transferability-the ability of competitors to gather the resources and capabilities necessary to support a competitive challenge
• Replicability-the ability of competitors to use duplicated resources and capabilities to imitate the other firm's success

a company's method for making money in the current business environment. Includes the key structural and operational characteristics of a firm--how it earns revenue and makes a profit; composed of 5 elements:

• who it serves
• what is provides
• how it makes money
• how it differntiates and sustains competitive advantage
• how it provides its products/services

linked set of value-creating activites that begin with basic raw materials coming from suppliers, moving on to a series of value-added activities involved in producing and marketing a product/service, and ending with distributors getting the final goods into the handsor the ultimate consumer

>raw materials

>primary manufacturing

>fabrication

>distributor

>retailer

-upstream

-downstream

**can be analyzed in terms of the profit margins available at any point along the value chain

value chain analysis

(Porter)

manufacturing a firm's primary activities usu begins with inbound logistics (raw materials/handling/warehouse), go through an operations process in which a product is manufactured, and continue on to outbound logistics (warehousing/distribution), to marketing/sales, and finally to service (installation, repair, sale of parts). 

**support activities: procurement (purchasing), technology development, hr management, and firm infrastructure (accounting, finance, strategic planning)

• examine each product line's value chain in terms of the various activities involved in producing that product or service: which are core competencies or core deficiencies
• examine the "linkages" within each product line's value chain
• examine the potential synergies among the value chains of different product lines or business units: economies of scale; economies of scope-the value chains of two separate products or services share activities, such as the same marketing channels or manufacturing facilities. 

• simple structure: stage 1 company; owner is jack of all trades; has no functional or product categories and is appropriate for small, entrepreneur-dominated company with one or two product lines that operates in a reasonably small easily identifiable market niche
• functional structure: medium sized firm w several product lines in one industry. employees specialized in marketing, financing, HR; stage 2 company
• divisional structure: large corportaion many product lines in several industries; functional specialists according to product/market distinctions; Stage 3 company
• SBU: Modifications of the divisional structure; groups composed of independent product segments that are given primary responsibility for their own functional areas. May be of any size/level but must 1. unique mission 2. identifiable competitors 3. an external market focus 4. control of its business functions
• Conglomerate structure: large company with many product lines in several unrelated industries; holding company is usually an assemblage of legally independent firms operating under one corporate umbrella

-conveys sense of identity for employees

-helps generate employee commitment to something greater than themselves

-adds to the stability of the organizaiton as a social system

-serves as a frame of reference for employees to use to make sense of organizational activities and to use as a guide for appropriate behavior

1) stakeholders perceptionsof a corportations ability to product quality goods

2) a corporations prominence in the minds of stakeholders

is the analyzing and ranking of possible investments in fixed assets such as land, building, and equipment in terms of the additional outlays and additional receipts that will result from each investment

**hurdle rate: years to pay back investment, rate of return, or time to break-even point

-Intermittent systems, the item is normally process sequentially, but the work and sequence of the process vary (Auto boyd repair shop)

-Continuous systems, laid out as lines on which products can be continuously assemebled or processed (assembly line)...reap benefits of economies of scale

strategic/long-term planning, is concerned with developing a corportaions mission, objectives, strategies, and policies; begins with situation analysis

strategy= opportunity/capacity

an extremely favorable niche that is so well suited to the firm's internal/external environment that other corporationss are not likely to challenge or dislodge it; may also be called a strategic sweet spot--satisfying customers' needs in a way that rivals cannot.

*management must always be looking for a strategic window--unique market opportunity available only for a particular time

1. lower cost strategy-design, produce, and market a comparable product more efficiently than its competitors

2. Differentiation strategy- provide unique/superior value to the buyer in terms of product quality, special features, or after-sale service

*porter proposes firm's competitive advantage in an industry is determined by its competitive scope, the breadth of a company's units target market

• cost leadership: lower-cost competitive strategy that aims at the broad mass market and requires "aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tigth cost and overhead control, avoidance or marginal customer accounts and cost minimization; McDonalds, Wal-Mart

• differentiation : aimed at the broad mass makret and involves the creationof a product/service that is perceived throughout its industry as unique; may charge a premium for this product as a result
• cost focus : low-cost comp strategy that focuses on a particular buyer group or geopgraphic market and attempts to serve only this niche; seek cost adv in its target segment 
• differentiation focus: concentraes on particular buyer group, product line segment, or geographic market; valued by those who believe that a company or unit that focuses its efforts is better able to serve the spicail needs of a narrow strategic target more efficiently

performance

features

reliability

conformace

durability

serviceability

aesthetics

perceived quality

• they involve large numbers of firms
• the acquied firms are typically owner operated
• the objective is not to gain incremental advantage, but to reinvent an entire industry

• competitive tactics: specific operating plan that details ow a strategy is to be put into action; link bt the formulation and implementation of strategy.
• Timing tactics: when to compete-When to implement,  *first mover/late mover
• Market location tactics: where to compete--offensively (takes place in an established competitors market locations) frontal assault, flanking maneuver, bypass attack, encirclement, guerrilla warfare or defensively (takes place in the firm's own current market position as a defense aga possible attack by rival) raise structural barriers, increase expected retaliation, lower the inducement for attack

to gain competitive advantage by working with other firms. Two general types:

collusion: the active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand. can be explicit or tacit

long-term cooperative arrangement bt two or more independent firms or business units that engage in business activitites for mutual economic gain. Mave have to:

• obtain or learn new capabilities
• obtain access to specific markets
• reduce financial risk
• reduce political risk

1. The firm's overall orientation toward growth, stability, or retrenchment (directional strategy)
2. The industries or markets in which the firm competes through its products and business units (portfolio analysis)
3. The manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units (parenting strategy)

Directional strategy

(orientation toward growth)

composed of three general orientations

• Growth strategies: expand the company's activities
• Stability strategies: make no change to the company's current activities
• Retrenchment strategies: reduct the company's level of activity

1. Concentration: on current product lines in one industry

-Vertical Growth>by taking over a function previously provided by a supplier or by a distributor. 

        -Horizontal Growth

2. Diversification: into other product lines in other industries

        -Concentric

        -Conglomerate

by expanding its operations into other geographic locations and/or by increasing the range of its products and services offered to the current markets...high survival rates

**Can be achieved through internal development or externally through acquistions and strategic alliances ith other firms in the same industry. Being achieved today through international expansion

Exporting

licensing

franchising

joint ventures

acquistions

Green-field developments

production sharing-outsourcing

turnkey operations

BOT Concept: build, operate, transfer

when management realizes that the current industry is unattractive and that the firm lacks outstanding abilities or skills that it could easily transfer to related products or services in other industries.

diversifying into an industry unrelated to it current one. Emphasis is on sound investment and value-oriented management

BCG

(boston consulting group)

growth share matrix

Question marks--are new products with the potential for success but they need alot of cash for delopment

Stars--market leaders that are typically at the peak of their product life cycle and are able to generate enough cash to maintin their high share of the market and usually contribe to company profits

Cash cows--bring in far more money than is needed to maintain their market share. in decline stage and are "milked" for cash hat will be invested in question marks

Dogs--have low market share and do not have the potential to bring in much cash. should either be sold off or managed carefully for the small amount of cash they can cause the company wanted to