Exploring Corporate Strategy

7th Edition

Chapter 3

Strategic Capability

Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Strategic Capability - Outline

Resources, competences and dynamic capabilities Continual improvement in cost efficiency Strategic capabilities and competitive advantage Organisational knowledge and strategic capability Diagnosing strategic capability: value chain, value networks, activity maps, benchmarking Developing strategic capabilities
Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Fit and Stretch

Chapter 2
External environment Opportunities and threats

Chapter 3 Internal strategic capability

Strengths and weaknesses

Matching strategic capabilities to opportunities in environment

Strategic fit

or
Leveraging strategic capabilities for competitive advantage
Strategic stretch

Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Resource-based View of Strategy

Competitive advantage derives from the distinctiveness of an organisations capabilities
Some businesses achieve extraordinary profits compared with others in the same industry Their resources or competences permit
production at lower cost or generation of superior product or service at standard cost

Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Strategic Capability
Strategic capability is the adequacy and suitability of the resources and competences of an organisation for it to survive and prosper Resources
Tangible resources physical assets of an organisation Intangible resources non-physical assets of an organisation

Competences
The activities and processes through which an organisation deploys its resources effectively
Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Strategic Capabilities and Competitive Advantage

Exhibit 3.1
Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

 Physical resources

Resources

Machines, buildings, production capacity

Financial resources
Capital, cash, debtors/creditors, suppliers of money (shareholders, bankers etc)

Human resources
Number and mix of people, skills and knowledge

Intellectual capital
Patents, brands, business systems, customer databases, goodwill
Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Strategic Capability- the terminology

Exhibit 3.2
Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005