Io & resource based model

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Io & resource based model

  1. 1. I/O Model Focus StrengthsStrengths WeaknessesWeaknesses OrganizationalOrganizational analysisanalysis OpportunitiesOpportunities ThreatsThreats EnvironmentalEnvironmental analysisanalysis
  2. 2. I/O Model: Above-Average Returns Strategy dictated by the external environment of the firm (what opportunities exist in these environments?) Firm develops internal skills required by external environment (what can the firm do about the opportunities?) External Environments General Environment ““Outside-in”Outside-in”
  3. 3. The I/O Model of Above-Average Returns The External Environment 1. Study the external environment, especially the industry environment. The general environment The industry environment The competitor environment
  4. 4. An Attractive Industry 2. Locate an attractive industry with a high potential for above- average returns. An industry whose structural characteristics suggest above-average returns The External Environment The I/O Model of Above-Average Returns
  5. 5. 3. Identify the strategy called for by the attractive industry to earn above-average returns. Selection of a strategy linked with above- average returns in a particular industry The External Environment An Attractive Industry Strategy Formulation The I/O Model of Above-Average Returns
  6. 6. Assets and Skills 4. Develop or acquire assets and skills needed to implement the strategy. Assets and skills required to implement a chosen strategy The External Environment An Attractive Industry Strategy Formulation The I/O Model of Above-Average Returns
  7. 7. Strategy Implementation Selection of strategic actions linked with effective implementation of the chosen strategy The External Environment An Attractive Industry Strategy Formulation Assets and Skills 5. Use the firm’s strengths (its developed or acquired assets and skills) to implement the strategy. The I/O Model of Above-Average Returns
  8. 8. Superior Returns The External Environment An Attractive Industry Strategy Formulation Assets and Skills Strategy Implementation  Superior returns: EarningSuperior returns: Earning of above-average returnsof above-average returns The I/O Model of Above-Average Returns
  9. 9. Resource-Based Model Focus StrengthsStrengths WeaknessesWeaknesses OrganizationalOrganizational analysisanalysis OpportunitiesOpportunities ThreatsThreats EnvironmentalEnvironmental analysisanalysis
  10. 10. Resource-Based Model • Each organization is a collection of unique resources and capabilities that provides the basis for its strategy • Capabilities evolve and must be managed dynamically (acquired and/or developed) • Differences in firms’ performances are due primarily to their unique resources and capabilities rather than structural characteristics of the industry
  11. 11. Resource-Based Model – cont’d Strategy dictated by the firm’s unique resources and capabilities Find an environment in which to exploit these assets (where are the best opportunities?) Differences in firms’ performances are due primarily to their unique resources and capabilities rather than structural characteristics of the industry Firm’s Resources THE FIRM ““Inside-out”Inside-out”
  12. 12. Criteria for Resources and Capabilities That Become Core Competencies CoreCore CompetenciesCompetencies CoreCore CompetenciesCompetencies ValuableValuableValuableValuable RareRareRareRare Costly to ImitateCostly to ImitateCostly to ImitateCostly to ImitateNonsubstitutableNonsubstitutableNonsubstitutableNonsubstitutable Allow the firm to exploit opportunities or neutralize threats in its external environment Possessed by few, if any, current and potential competitors When other firms cannot obtain them or must obtain them at a much higher cost The firm is organized to obtain the full benefits of the resources
  13. 13. Resources 1. Identify the firm’s resources. Study its strengths and weaknesses compared with those of competitors. Inputs into a firm’s production process The RBV Model of Above-Average Returns
  14. 14. Capability 2. Determine the firm’s capabilities. What do the capabilities allow the firm to do better than its competitors. Capacity of an integrated set of resources to integratively perform a task or activity Resources The RBV Model of Above-Average Returns
  15. 15. 3. Determine the potential of the firm’s resources and capabilities in terms of a competitive advantage. Ability of a firm to outperform its rivals Competitive Advantage Capability Resources The RBV Model of Above-Average Returns
  16. 16. An Attractive Industry 4. Locate an attractive industry. An industry with opportunities that can be exploited by the firm’s resources and capabilities Competitive Advantage Capability Resources The RBV Model of Above-Average Returns
  17. 17. Strategy Implementation Strategic actions taken to earn above-average returns An Attractive Industry Competitive Advantage Capability Resources 5. Select a strategy that best allow the firm to utilize its resources and capabilities relative to opportunities in the external environment. The RBV Model of Above-Average Returns
  18. 18. Superior Returns  Superior returns: EarningSuperior returns: Earning of above-average returnsof above-average returns Strategy Implementation An Attractive Industry Competitive Advantage Capability Resources The RBV Model of Above-Average Returns
  19. 19. Superior Returns Strategy Implementation An Attractive Industry Competitive Advantage Capability Resources The RBV Model Superior Returns The External Environment An Attractive Industry Strategy Formulation Assets and Skills Strategy Implementation The I/O Model
  20. 20. SWOT Analysis StrengthsStrengths WeaknessesWeaknesses OrganizationalOrganizational analysisanalysis OpportunitiesOpportunities ThreatsThreats EnvironmentalEnvironmental analysisanalysis Framework: RBV Model Framework: I/O Model

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