Nike's core competency is its ability to create and leverage athlete endorsements effectively. It strategically selects athletes who align with its brand image and values, and invests in elevating them into heroes through storytelling and marketing. While risky, as athletes may face controversies, this approach has driven Nike's historical success in building its brand around athletics globally. VRIO analysis shows that while imitable, Nike's competency provides value and is challenging for competitors to fully replicate due to its experience, reputation, and resources to organize capturing value from athlete endorsements.

1. Internal Analysis
• Resources, Capabilities,
Competencies
• Distinctive Capabilities
• Group E
• Jay Khetan & Mam Mass Sey

2. To formulate and implement a strategy
that enhances the firm’s chances of
gaining and sustaining competitive
advantage, the firm must have certain
types of resources and capabilities that
combine to form core competencies.
External Analysis to Internal Analysis

3.  Looking inside the firm to analyse allow us to understand the firm’s
- Strengths, and
- weakness.
Strategic leaders want to leverage their firm’s internal strength to
exploit external opportunities and mitigate internal weakness and
external threats.
External Analysis to Internal Analysis

4. Linking Core Competencies, Resources, Capabilities
Capabilities
Organizational and managerial skills
necessary to orchestrate a diverse set of
resources and deploy them strategically.
Resources
Any assets that a firm can draw on when
formulating and implementing a strategy.
Core Competencies
Unique strengths, embedded deep within
a firm, that are critical to gaining and
sustaining competitive advantage.
Competetive Advantage

5. Links to competitive advantage
and superior firm performance

6. Resource Based View
Resource Based View
In the resource-based view of the firm, a resource includes any assets as well as any capabilities and
competencies that a firm can draw upon when formulating and implementing strategy.

7. Resource Based View
Resource Based View
In the resource-based view of the firm, a resource includes any assets as well as any capabilities and
competencies that a firm can draw upon when formulating and implementing strategy.
Resource
Immobility
Assumption in the resource-based view that a firm has resources that tend to be “sticky” and that do
not move easily from firm to firm.
The resource differences that exist between firms are difficult to replicate and, therefore, can last for
a long time.
Resource Heterogeneity
Bundles of resources, capabilities, and competencies differ across firms
looking more critically at the resource bundles of firms competing in the same industry
Two Critical assumptions

8. VRIO Framework
 Used to assess the competitive implications of a firm’s resources

9. Valuable
A resource is valuable if
It enables the firm to exploit an external opportunity
It enables the firm to offset a threat
It enables a firm to increase its economic value
creation (V – C) – There is demand for the resource

10. Rare
A resource is Rare if
The number of firms that possess it is less than the
number of firms it would require to reach a state of
perfect competition.
If the resource is common, it will result in perfect
competition where no firm is able to maintain a
competitive advantage

11. Imitation Costly
A Resource is costly to imitate if
A resource is costly to imitate if firms that do not
possess the resource are unable to develop or buy
the resource at a comparable cost.

12. Organised to Capture Value
A Resource is Organised to capture value if
 It has an effective organizational structure
It has coordinating systems
Example – Xerox Palo Alto Research Center (PARC)
Developed the first Word-processing application Graphical User Interface
(GUI), Ethernet, Mouse, Personal Computer– These innovations did not fit
within the Xerox focus– Management was busy pursuing innovations in
the
photocopier business - not organized to capture the gains!

13. Isolating Mechanisms
Barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
Better expectations of
future resource value
Causal Ambiguity Intellectual property
(IP) Protection
Path Dependence Social Complexity
1 2 3 4 5

14. Organised to Capture Value
A Resource is Organised to capture value if
 It has an effective organizational structure
It has coordinating systems
Example – Xerox Palo Alto Research Center (PARC)
Developed the first Word-processing application Graphical User Interface
(GUI), Ethernet, Mouse, Personal Computer– These innovations did not fit
within the Xerox focus– Management was busy pursuing innovations in
the
photocopier business - not organized to capture the gains!

15. Understanding
Dynamic
Capabilities and
Core Rigidities
The Dynamic Capabilities Perspective

16. The Dynamic
Capabilities Perspective
• Dynamic capabilities are a
fundamental concept in strategic
management.
• They refer to a firm's ability to
adapt and innovate in response to
changing external environments.
• This perspective focuses on how
firms manage their resources to
create competitive advantage.

17. Dynamic Capabilities Defined
• Dynamic Capabilities
• Dynamic capabilities involve the ability to sense changes in the business environment.
• They also include the ability to seize opportunities and reconfigure resources to address these
changes effectively.
• Essentially, it's about a firm's capacity for continuous adaptation and innovation.

18. Resource Stocks and
Resource Flows
Key Components of Dynamic Capabilities
• Resource Stocks: These are a firm's existing assets,
capabilities, and knowledge base.
• Resource Flows: These represent how resources
are combined, reconfigured, and deployed in
response to changing conditions.

19. Core Rigidities
• Understanding Core Rigidities
• Core rigidities are an important concept introduced by Leonard-
Barton.
• They refer to a situation where a firm's past strengths become its
weaknesses when it is unable to adapt to changing circumstances.
Core Rigidities in Depth
• Core rigidities can arise when a firm becomes too specialized in its
existing capabilities.
• They hinder the development of new capabilities and limit the
firm's ability to respond to changing market conditions.

20. Overcoming Core Rigidities
Addressing Core Rigidities
• Firms can overcome core rigidities by fostering a
culture of innovation and adaptability.
• Encouraging cross-functional teams, continuous
learning, and diversification can help mitigate core
rigidities.

21. Implications for
Strategic
Management
Practical Implications
• Understanding dynamic
capabilities and core rigidities
is crucial for strategic
management.
• Firms should continuously
assess their resource stocks,
resource flows, and their
ability to adapt to remain
competitive.

22. Unlocking Competitive
Advantage: The Value Chain
and Strategic Activity Systems
The Value Chain and Strategic Activity
Systems
• These concepts are fundamental to
understanding how firms create value
and achieve competitive advantage.
• They provide a framework for analyzing
and improving a company's operations
and strategic activities.

23. The Value Chain
Defined
What is the Value Chain?
The value chain is a concept introduced by
Michael Porter.
It represents the sequence of activities
that a firm engages into design, produce,
market, deliver, and support its products
or services.

24. Value Chain
Activities
Key Components of the Value
Chain
• Primary Activities: These are
directly involved in creating
and delivering the product or
service to customers (e.g.,
production, marketing, sales).
• Support Activities: These
activities enable and enhance
the primary activities (e.g.,
HR, technology, procurement).

25. Value Chain Analysis
Why Analyze the Value Chain?
Value chain analysis helps identify areas
where a company can create value,
reduce costs, or differentiate itself.
It aids in strategic decision-making by
highlighting strengths and weaknesses in
the value-creating process.

26. Strategic Activity
Systems Defined
A strategic activity system is a
network of interdependent
activities that collectively deliver
value to customers.
It's about how different activities
work together to form a
competitive advantage.

27. Strategic Fit
A key concept is the strategic fit,
where activities within a system
complement and reinforce each
other.
A well-aligned activity system is a
source of competitive
advantage.

28. Importance of Strategic Activity Systems
WHY CARE ABOUT ACTIVITY SYSTEMS? UNDERSTANDING ACTIVITY SYSTEMS HELPS
FIRMS ASSESS HOW THEY CREATE AND DELIVER
VALUE UNIQUELY.
IT AIDS IN MAKING STRATEGIC CHOICES, SUCH AS
COST LEADERSHIP OR DIFFERENTIATION, BASED
ON THE CONFIGURATION OF ACTIVITIES.

29. Implications for Strategic Leader: Using SWOT Analysis for
Insights
SWOT Analysis is a strategic planning tool used to assess a company's
internal Strengths and Weaknesses and external Opportunities and
Threats.
Let's explore how strategic leaders can leverage SWOT analysis for
valuable insights.

30. Internal Analysis:
Strengths &
Weaknesses
• Strengths: Identify and capitalize on your
organization's internal assets and advantages.
• Weaknesses: Address areas of vulnerability and
internal limitations

31. External
Analysis:
Opportunities
& Threats
Evaluating External Factors
Opportunities: Recognize external factors that can be
leveraged for growth and advantage.
Threats: Understand external risks and challenges that may
impact your organization.

32. Implications
for Strategic
Leaders
Strategic Decision-Making
• Leverage Strengths: Build strategies that capitalize on your
organization's strengths.
• Mitigate Weaknesses: Develop plans to address and
improve weaknesses internally.
• Exploit Opportunities: Seize external opportunities to drive
growth and innovation.
• Mitigate Threats: Implement risk mitigation strategies to
safeguard against external threats.

33. Aligning with
Organizational
Goals
Strategic Alignment
• Ensure that SWOT insights align with your organization's
mission, vision, and long-term goals.
• SWOT should inform your strategic priorities and guide
resource allocation.

34. Periodic Review and
Adaptation
Continuous Improvement
• SWOT analysis is not a one-time
exercise; it should be regularly reviewed
and updated.
• Strategic leaders must be agile, adapting
strategies in response to changing
internal and external conditions.

35. Encouraging Cross-Functional Collaboration
Team Engagement
SWOT analysis should
involve input from various
departments and levels
within your organization.
Foster a collaborative
environment to generate
diverse insights.

36. Communicating
Findings
Effectively
Transparent Communication
Ensure that SWOT findings are clearly communicated
throughout the organization.
Transparency promotes buy-in and a shared understanding of
strategic priorities.

37. Nike’s Core Competency:
The Risky Business of Creating Heroes

38. Nike’s Historical Success
Building as Athletics
- Nike's core competency
lies in its ability to create
and leverage athlete
endorsements effectively.
- This approach began with
running and extended to
various sports.
The Risky Business
Challenges and Risks:
- While athlete endorsements
can be powerful, they come with
risks.
- Athletes may face controversies,
scandals, or changing public
perceptions, impacting the brand.
The endorsement strategy
Building Heroes:
- Nike strategically selects
athletes who align with its
brand image and values.
 - The company invests in
storytelling and marketing
to elevate athletes into
"heroes."
Global Reach:
- Nike's competency
extends globally, with the
company strategically
selecting athletes from
various countries and
sports.
- This approach allows them
to connect with a diverse
customer base and tailor
marketing efforts to
different regions.

39. VRIO analysis in Nike’s case
 Valuable - Yes, Nike's ability to create heroes is valuable. Associating its brand with iconic athletes
helps Nike differentiate itself in a highly competitive sportswear industry. It gives Nike a unique
selling proposition, as consumers often aspire to be like the athletes they admire.
 Rare - This competency is somewhat rare, as not every sportswear company can secure high-profile
athlete endorsements to the same degree as Nike. However, other companies also use athlete
endorsements, so it's not entirely unique to Nike.
 Inimitable - Nike's ability to create heroes is challenging for competitors to imitate fully. It's not just
about signing athletes; it's about cultivating long-term relationships, building a narrative around
these athletes, and integrating them into the brand's identity. Nike's history, reputation, and
financial resources contribute to this inimitability.
 Organised to Capture Value - Nike is organized to capture the value created by this core competency.
The company invests heavily in marketing and advertising, with a focus on hero-driven campaigns.
It has a global reach and distribution network that allows it to capitalize on the appeal of its athlete
endorsers in various markets.