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STRATEGIC MANAGEMENT; WEEK 2 1

Strategic Management; Week 2 Summary

Shamim Tootoonchi (1711339)

University Canada West

Professor: Daren Hancott Ph.D

MGMT 661: Strategic Management

The assignment is due: Sun Jan 26, 2019


STRATEGIC MANAGEMENT; WEEK2 2

Table of Contents

Introduction .......................................................................................................................................................................... 3

Organizational Internal environment ........................................................................................................................... 3

Value and its importance.................................................................................................................................................. 3

Tangible and intangible resources ................................................................................................................................. 4

Capabilities and their development............................................................................................................................... 4

Core competencies ............................................................................................................................................................. 4

Creating value from supply chain ................................................................................................................................. 5

Outsourcing .......................................................................................................................................................................... 5

Internal strength and weakness ...................................................................................................................................... 6

The critical role of avoiding core rigidities ................................................................................................................ 6

Chapter self- reflection ..................................................................................................................................................... 7

References............................................................................................................................................................................. 8
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Introduction

In today’s market with high pace of technological advances and presence of internet,

it is becoming more Burdon to create and sustain a competitive advantage. As a result, more

and more organizations and firms ae seeking innovations to create core competencies. The

more critical aspect of creating a strategy, is how to implement it in a way that it remains

sustainable for a longer period of time. In this essay, the importance of these core

competencies are studied in addition to many positive aspects of some internal characteristics

of a firm is analyzed. One of the main competencies, supply chain is evaluated and defined as

the main approach towards creating value.

Organizational Internal environment

Firms used to originally invest more in their traditional resources in order to make

their products and services unique. However, today’s various mindsets including

globalization, forces them to be more flexible towards different cultures and boundaries. As a

result, spreading Global mindset in organizational culture and its strategy, plays and impotent

role in establishing that unique competency. This mind step during internal analysis, can give

a clear and broad view of the firm’s position amongst its rivals (Dess et al. 2019, Hitt et al,

2017).

Value and its importance

Value generally is the considered worth of a service or product in consumers’ eyes

and is created by firms innovatively leveraging their resources and competencies. Eventually,

the created values will lead to above average returns which is the main goal of any firm.

However, companies must consider the fact that internal resources is as important as firms’

market and industry to create and maintain targeted value (Dess et al. 2019, Hitt et al, 2017).
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Tangible and intangible resources

All the inputs of a firm which will be processed to create core competencies and

advantages, are that firm’s resources. These resources can be either tangible such as the assets

of the firms or intangible such as the brand value of the organization. In addition, the

conditions of these resources and competencies which directly influence critical managerial

decisions, are mostly uncertainty regarding the characteristics and then complexity and

conflicts. One must consider this notion that the quality of leaders’ decisions on resources

and competencies can directly impact on the ability to achieve competitive advantage. This

parameter can be clearly seen in Target case when they decided to move to Canada to explore

new markets, the poor quality of leaders’ decisions ruined the face of a big company such

Target in Canada in less than 2 years.

Capabilities and their development

Firms can flexibly use their resources in order to create their oath towards required

and even more advanced competencies. They basically are able to align and coordinate

individuals’ tangible and intangible resources in order to crat capabilities. These capabilities

are usually developed in specific functional sections of a firm such as Distribution, Human

Resources, marketing and etc.

Core competencies

Amongst a firm’s capabilities, there are the ones which directly contribute to

achieving competitive advantages amongst rivals in an industry which are called core

competencies. These competencies require a clear organizational process in order to

collecting, coordinating and learning how to deploy various resources and capabilities. Many

firms are attempting to build core competitive advantages which are sustainable as well. One
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of the approaches is to evaluate the se resources based on VRIO model which identifies

whether the competencies are:

 Valuable

 Rare

 Not Inimitable

 Non-substitutable

(Glistau et al, 2016)

Creating value from supply chain

Firms are almost all the time putting effort in utilizing resources in a way that

incurred costs are less than the value they create through their supportive functions and

primary activities which can be evaluated by Porter’s supply chain model. This model

interestingly demonstrates that by investing and modifying support functions of a firm

including Finance, Human Resources and Management Information Systems (MIS) in

addition to primary activities of the firm which mainly in supply chain and operations

activities, customers are able to receive what they perceive as valuable (Dess et al. 2019, Hitt

et al, 2017).

Outsourcing

Following the introduction of Supportive functions and primary activities, another

approach to optimize production process is to use external resources and third party firms

which is referred to as outsourcing. This solution should be highly evaluated depending on

the local market of the company and economic, social and cultural environment of both the

client and the contractor. However, in many industries globally the trend towards more and

more outsourcing is growing rapidly. The main beneficiary aspect of outsourcing is the
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chance and opportunity it provides for the firms to focus more on few core competencies and

outsources some supportive and primary activities to the companies who already have these

capabilities and advantages.

Internal strength and weakness

Majority of the firms are seeking solutions and approaches to survive their market and

its competition. However, the globalization mindset today, encourages and recommends

firms to not only survive, but also sustain their progress and expansion by exceeding

customers’ expectations. This can only be achieved by identifying internal weaknesses and

strength and modify them. Being aware of one’s weaknesses and strength gives the ability of

being predicted and substituted to its competitors. As a result, establishing a constant habit of

utilizing models such as SWOTT , PESTEL, 3Cs by Kenichi Ohmae (Ward & Rivani,

2010))in order to monitor and identify strength, weaknesses and firms; position in the

industry in several scales, is a long term profitable investment.

The critical role of avoiding core rigidities

Despite the importance and vital role of core competencies, firms should be cautious

of core rigidities which can possibly be caused. Constant success, market growth and

acceptance by consumers can little by little create the feeling of over-confidence and not

accepting the change when it is required. Firms at all time must maintain the core flexibility

according to their market condition in order to be able to notice the change coming their path

and adapt to the new conditions and move with customer’s expectations. (Dess et al. 2019,

Hitt et al, 2017)


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Chapter self- reflection

Formulating and maintain strategies require proper data collection and humbleness.

Firms can easily be misguided if feeling are controlling decisions without authenticate facts.

One must consider the proper knowledge of available tools for identifying important

organizational features. Models such as the ones mentions in this chapter and many more

including 3Cs, McKinsey’s ,ANSOFF and etc. are provided almost everywhere. However,

the proper knowledge and insights to utilize and interpret their results is more important

factor which can be easily misguided.


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References

Dess, G. G., McNamara, G., Eisner, A. B., & Lee, S. (2019). Strategic Management (9th ed.).

New York: McGraw Hill education. ISBN 9781259813955

Hitt, M.A., Ireland, R.D.& Hoskisson, R.E. (2017). Strategic Management; Competitiveness

& Globalization (12th ed). Cengage Learning. ISBN: 978-1-305-50214-7.

Ward, D., Rivani, E. (2010). An Overview of Strategy Development Models and the Ward-

Rivani Model. European School of Economics.