*SCANNING THE ENVIRONMENT*

Organizational analysis
- look within the corporation itself to identify internal
strategic factorscritical strengths and weaknesses that are
likely to determine whether a firm will be able to take
advantage of opportunities while avoiding threats.
concerned with identifying and developing an
organizations resources and competencies.
CORE AND DISTINCTIVE COMPETENCIES
Resources
- are an organizations assets and are thus the basic building
blocks of the organization.
- They include tangible assets, such as its plant, equipment,
finances, and location, human assets, in terms of the
number of employees, their skills, and motivation, and
intangible assets, such as its technology (patents and
copyrights), culture, and reputation
Capabilities
- refer to a corporations ability to exploit its resources. They
consist of business processes and routines that manage the
interaction among resources to turn inputs into outputs.
- Functionally based and is resident in a particular function.
Dynamic Capabilities - When capabilities are constantly
being changed and reconfigured to make them more
adaptive to an uncertain environment
Competency - is a cross-functional integration and
coordination of capabilities.
Core competency - is a collection of competencies that
crosses divisional boundaries, is widespread within the
corporation, and is something that the corporation can do
exceedingly well.
Distinctive Competencies - When core competencies are
superior to those of the competition
VRIO framework of analysis (Barney)
1. Value: Does it provide customer value and competitive
advantage?
2. Rareness: Do no other competitors possess it?
3. Imitability: Is it costly for others to imitate?
4. Organization: Is the firm organized to exploit the
resource?

Clusters - geographic concentrations of interconnected

companies and industries.
Two characteristics determine the sustainability of a
firms distinctive competency:
1. Durability - is the rate at which a firms underlying
resources, capabilities, or core competencies depreciate
or become obsolete.
2. Imitability - is the rate at which a firms underlying
resources, capabilities, or core competencies can be
duplicated by others.
Reverse Engineering - involves taking apart a
competitors product in order to find out how it works
A core competency can be easily imitated to the extent that
it is:
1. Transparency - is the speed with which other firms can
understand the relationship of resources and capabilities
supporting a successful firms strategy
2. Transferability - is the ability of competitors to gather
the resources and capabilities necessary to support a
competitive challenge
3. Replicability - is the ability of competitors to use
duplicated resources and capabilities to imitate the other
firms success
Explicit Knowledge
- Knowledge that can be easily articulated and
communicated.
- The type of knowledge that competitive intelligence
activities can quickly identify and communicate.
Tacit knowledge - is knowledge that is not easily
communicated because it is deeply rooted in employee
experience or in a corporations culture.
- More valuable and more likely to lead to a sustainable
competitive advantage than is explicit knowledge because it
is much harder for competitors to imitate
Continuum Of Sustainability - An organizations
resources and capabilities can be placed on a continuum to
the extent they are durable and cant be imitated (that is,

arent transparent, transferable, or replicable) by another

firm.
BUSINESS MODELS
Business Model
- is a companys method for making money in the current
business environment.
- includes the key structural and operational characteristics
of a firmhow it earns revenue and makes a profit
Five Elements
Who it serves
What it provides
How it makes money
How it differentiates and sustains competitive advantage
How it provides its product/service
Possible Business Models
1. Customer solutions model - is a consulting model.
2. Profit pyramid model - key is to get customers to buy in at
the low-priced, low-margin entry point and move them up to
high-priced, high-margin products where the company makes
its money
3. Multi-component system/installed base model - The
product is thus a system, not just one product, with one
component providing most of the profits.
4. Advertising model - offers its basic product free in order to
make money on advertising

5. Switchboard model - a firm acts as an intermediary to

connect multiple sellers to multiple buyers. - Financial planners
juggle a wide range of products for sale to multiple customers
with different needs.
6. Time model Being the first to market with a new innovation
allows a pioneer to earn high margins.
7. Efficiency model - a company waits until a product becomes
standardized and then enters the market with a low-priced,
low-margin product that appeals to the mass market
8. Blockbuster model - In some industries, such as
pharmaceuticals and motion picture studios, profitability is
driven by a few key products. The focus is on high investment
in a few products with high potential payoffsespecially if they
can be protected by patents.
9. Profit multiplier model - The idea of this model is to develop
a concept that may or may not make money on its own but,
through synergy, can spin off many profitable products.
10.Entrepreneurial model
- a company offers specialized products/services to market niches
that are too small to be worthwhile to large competitors but have
the potential to grow quickly.
- This model has often been used by small high-tech firms that
develop innovative prototypes in order to sell off the companies
(without ever selling a product) to Microsoft or DuPont.
11.
De Facto industry standard model - In this model, a
company offers products free or at a very low price in order to
saturate the market and become the industry standard. Once
users are locked in, the company offers higher-margin products
using this standard.