Resources, Capabilities and Core Competencies

Resources
Are a firms assets, including people and the value of its brand name Represent inputs into a firms production process, such as:

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Capital equipment Skills of employees Brand names Financial resources Talented managers

Resources, Capabilities and Core Competencies

Capabilities
The foundation of many capabilities lies in:
The unique skills and knowledge of a firms employees The functional expertise of those employees

Capabilities are often developed in specific functional areas or as part of a functional area
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Examples of Firms Capabilities

Table 3.3 Copyright 2004 SouthWestern. All rights reserved. 3 3

Resources, Capabilities and Core Competencies

Core Competencies
Resources and capabilities that serve as a source of a firms competitive advantage:
Distinguish a company competitively and reflect its personality Emerge over time through an organizational process of accumulating and learning how to deploy different resources and capabilities
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Resources, Capabilities and Core Competencies

Core Competencies
Activities that a firm performs especially well compared to competitors Activities through which the firm adds unique value to its goods or services over a long period of time

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3 5

Building Sustainable Competitive Advantage

Four Criteria of Sustainable Competitive Advantage

Valuable Rare Costly to imitate Nonsubstituable

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The Four Criteria of Sustainable Competitive Advantage

Valuable Capabilities Help a firm neutralize threats or exploit opportunities Are not possessed by many others Historical: A unique and a valuable organizational culture or brand name Ambiguous cause: The causes and uses of a competence are unclear Social complexity: Interpersonal relationships, trust, and friendship among managers, suppliers, and customers No strategic equivalent
Table 3.4 Copyright 2004 SouthWestern. All rights reserved. 3 7

Rare Capabilities Costly-to-Imitate Capabilities

Nonsubstitutable Capabilities

Building Sustainable Competitive Advantage

Valuable capabilities
Help a firm neutralize threats or exploit opportunities

Rare capabilities
Are not possessed by many others

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Building Sustainable Competitive Advantage Costly-to-Imitate

Capabilities
Historical
A unique and a valuable organizational culture or brand name

Ambiguous cause
The causes and uses of a competence are unclear

Social complexity
Interpersonal relationships, trust, and friendship among managers, suppliers, and customers
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Building Sustainable Competitive Advantage

Nonsubstitutable Capabilities
No strategic equivalent

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310

Outcomes from Combinations of the Criteria for Sustainable Competitive Advantage

Table 3.5 Copyright 2004 SouthWestern. All rights reserved. 311

Channel and Distribution Tactics

Bucklins definition of distribution Todays system of exchange Channel intermediaries Six basic channel decisions Selection consideration

A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption
Bucklin - Theory of Distribution Channel Structure (1966)

Todays system of exchange

Promotion Contact Negotiation Transporting and storing

Users

Producers

Financing Packaging Money Goods

Channel intermediaries - Wholesalers

Break down bulk buys from producers and sell small quantities to retailers Provides storage facilities reduces contact cost between producer and consumer Wholesaler takes some of the marketing responsibility e.g sales force, promotions

Channel intermediaries - Agents

Mainly used in international markets Commission agent - does not take title of the goods. Secures orders. Stockist agent - hold consignment stock Control is difficult due to cultural differences Training, motivation, etc are expensive

Channel intermediaries - Retailer

Much stronger personal relationship with the consumer Hold a variety of products Offer consumers credit Promote and merchandise products Price the final product Build retailer brand in the high street

Channel intermediaries - Internet

Sell to a geographically disperse market Able to target and focus on specific segments Relatively low set-up costs Use of e-commerce technology (for payment, shopping software, etc)

Six basic channel decisions

Direct or indirect channels Single or multiple channels Length of channel Types of intermediaries Number of intermediaries at each level

Selection consideration
Market segment - must know the specific segment and target customer Changes during plc(product life cycle) - different channels are exploited at various stages of plc Producer-distributor fit - their policies, strategies and image Qualification assessment - experience and track record must be established Distributor training and support