Exam 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Samsung has core competencies in manufacturing its own components and components for other competitors, Which help it to predict future innovations and bring them to market quickly. It is in direct competition with Apple in the smartphone market. Its competencies allow Samsung to Apple's innovations.

Case Scenario 1: Heartsong LLC. Heartsong LLC is a designer and manufacturer of replacement heart valves based in Peoria, Illinois. While a relatively small company in the medical devices field, it has established a worldwide reputation as the provider of choice high-quality, leading-edge artificial heart valves. Most of its products are sold to large regional hospital systems and research hospitals. Specialty heart centers are another emerging, but fast-growing, market for its valves. While Heartsong would like to grow quickly, its growth is constrained by the need to finance larger production runs and then carry this additional inventory. For products like those of Heartsong, vendors typically do not collect payment until the unit is actually used in surgery. Moreover, heart valves are usually required on short notice, which means that they must be either onsite, or inventoried at a nearby location. If nearby, then transport of the unit to a hospital or heart center occurs within a matter of hours, and sometimes minutes. For this reason, accelerated growth would require Heartsong to both finance increased production of its heart valves and carry increased levels of inventory that are in fact sitting on its customers' shelves. In fact, inventory-carrying cost is its single largest cost outside of research and development. While profitable growth is necessary if Heartsong is to continue extending its competitive advantage through increasingly greater investments in basic heart valve R&D, it is not clear that the company can internally support all these increased financial commitments (R&D, manufacturing, and inventory). Doc Watson, the CEO of Heartsong, is considering an outside contractor, EdFex, to handle the inventorying, warehousing, and delivery of its valves. EdFex has secure, high-tech warehouses in most major population centers around the country, and can ensure delivery of a product to these markets from its warehouses in less than one hour. -(Refer to Case Scenario 1). What are the implications of an EdFex outsourcing arrangement for the capabilities underlying Heartsong's competitive advantage?

A financial management firm has existed for more than 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its

At the conclusion of the internal analysis,firms must identify their opportunities and threats in resources,capabilities,and core competencies.

Borders had a competitive advantage in physical location. However,Amazon fundamentally changed customer buying habits,and Borders' competitive advantage became a core

Case Scenario 3: B.B. Mangler. B.B. Mangler is a top U.S. business-to-business distributor of maintenance, repair, and service equipment, components, and supplies such as compressors, motors, signs, lighting and welding equipment, and hand and power tools. Customers include contractors, service and maintenance shops, manufacturers, hotels, government, and health care and educational facilities. Mangler's industry is typically referred to as MRO, an acronym for maintenance, repair, and supplies. Mangler states its strategy as having the "capacity to quickly offer an unmatched breadth of lowest total cost MRO solutions to business." Mangler's GoMRO sourcing center for indirect spot buys locates products through its unique database of 8,000 suppliers and 5 million products. Mangler also dominates the North American market in terms of its sheer local physical presence. It has 388 physical branches in the U.S. largest cities, including Puerto Rico (90 percent of sales), 184 in Canada, and 5 in Mexico. This physical presence also has garnered Mangler a reputation for excellent, dependable service in its target markets, which in turn translates into a vast and loyal clientele. -(Refer to Case Scenario 3). Mangler's reputation among its customers is an example of

Examples of support activities include all of the following EXCEPT

Amazon is building a new distribution facility in Robbinsville,New Jersey. It is immediately off the exit of a major road. This is an example of a(n)______resource.

One criterion for a resource or capability to be a source of competitive advantage is that it must allow the firm to perform a value-creating activity that competitors cannot perform.

Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work.

One capability that can be learned from failure is when to

If a firm offers a service that is valuable,rare,and costly to imitate,but a substitute exists for the service,the firm will

Case Scenario 1: Heartsong LLC. Heartsong LLC is a designer and manufacturer of replacement heart valves based in Peoria, Illinois. While a relatively small company in the medical devices field, it has established a worldwide reputation as the provider of choice high-quality, leading-edge artificial heart valves. Most of its products are sold to large regional hospital systems and research hospitals. Specialty heart centers are another emerging, but fast-growing, market for its valves. While Heartsong would like to grow quickly, its growth is constrained by the need to finance larger production runs and then carry this additional inventory. For products like those of Heartsong, vendors typically do not collect payment until the unit is actually used in surgery. Moreover, heart valves are usually required on short notice, which means that they must be either onsite, or inventoried at a nearby location. If nearby, then transport of the unit to a hospital or heart center occurs within a matter of hours, and sometimes minutes. For this reason, accelerated growth would require Heartsong to both finance increased production of its heart valves and carry increased levels of inventory that are in fact sitting on its customers' shelves. In fact, inventory-carrying cost is its single largest cost outside of research and development. While profitable growth is necessary if Heartsong is to continue extending its competitive advantage through increasingly greater investments in basic heart valve R&D, it is not clear that the company can internally support all these increased financial commitments (R&D, manufacturing, and inventory). Doc Watson, the CEO of Heartsong, is considering an outside contractor, EdFex, to handle the inventorying, warehousing, and delivery of its valves. EdFex has secure, high-tech warehouses in most major population centers around the country, and can ensure delivery of a product to these markets from its warehouses in less than one hour. -(Refer to Case Scenario 1). What value-chain activities appear to underlie Heartsong's competitive advantage?

Older employees are less valuable resources to firms than younger employees,because the older employees have lower stocks of knowledge. Consequently,employee reductions should begin with early-retirement inducements.

Case Scenario 2: ERP Inc. ERP Inc. is a leading provider of enterprise integration software (EIS). EIS allows a firm to connect and integrate processes across all aspects of its business, regardless of where they are located around the world. ERPI is a product-focused company, whereas most competitors in its market space, such as Oracle, operate as "solutions companies." Oracle and Microsoft have begun to devote considerable resources to the development of and acquisition of products to compete in the EIS space. Despite these recent threats, one benefit of its product-focused strategy is that ERPI's proprietary product is generally recognized as being 200 percent to 300 percent better than competitors' software. ERPI estimates it will take two to three years for competitors to develop the capabilities needed to bring a competing product to market. ERPI invests a considerable percentage of its profits in basic R&D to support its core products. As evidence of this, among its competitors the firm maintains the largest in-house programming staff dedicated solely to the development of advanced enterprise integration software. Installation and related consulting for EIS typically cost between $100 million and $200 million, with the ERPI software component accounting for about 20 percent of the installed cost (the remaining 80 percent is spent on the actual installation, not counting the value of the customer's time). ERPI's target market consists of the world's largest manufacturing and industrial firms, and it currently enjoys a 60 percent market share. -(Refer to Case Scenario 2). Imagine that ERPI's historical growth strategy has focused on making one sale and then moving on to the next target company. After several years of building market share using this approach,what new resources has ERPI developed?

All core competencies have the potential to become core

Resources must be combined to form capabilities,as illustrated by Subway,which linked its fresh ingredients with several other resources,including the continual training it provides to those running the firm's units as the foundation for customer service as a capability.

Government agencies are known for having so many layers and rules that decisions are made slowly and inefficiently. In this case the resource is a detriment to taxpayers using and paying for the bureaucracy.

A decision that results in failure

The proper matching of what a firm can do with what it might do