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SMMC G6 [BS-3] (Isolating mechanisms (Property rights (logos, copyrights…

- - - - definition
        
        productive firm specific assets of different kinds that one firm owns and another one doesn't.
      - 2 resource types
        
        tangible resources
        
        financial
        
        internally generated cash
        
        cash in hand
        
        borrowing capacity
        
        physical
        
        machinery
        
        buildings
        
        computing & telecom equipment
        
        raw material sources (forestry, mining...)
        
        retail outlets
        
        warehouses
        
        real estate
        
        inventory
        
        intangible resources
        
        relational
        
        customers relationships
        
        alliances
        
        supplier & distributor relationships
        
        relationships & reputation with stakeholders
        
        brand loyalty
        
        product reputation
        
        human capital
        
        motivation
        
        creativity & adoptability
        
        training
        
        commitment
        
        skills & expertise
        
        team cohesion
        
        leadership abilities
        
        coordination
        
        technology
        
        production processes
        
        designs & plans
        
        innovation processes
        
        prototypes & models
        
        software & IT systems
        
        creative products
        
        organizational routines & systems
        
        product innovations
      - which resources matter most in today's business environment?
        
        depends on which resources have the greatest potential to create economic value
        
        reduce cost in the business
        
        increase customer value
        
        increase the price cost wedge
        
        depends on which resources are more difficult for firms to own or access exclusively
        
        intangible resources are becoming relatively more important for companies
        
        intangibles are much more important nowadays for creating economic value
        
        intangible resources have a greater potential to differentiate firms from their rivals.
        
        firms have greater access to financial and physical resources in the modern market-based economy
    - - definition
        
        A capability is the capacity to perform a particular activity in a reliable and at least minimally satisfactory manner.
        
        capabilities are the capacity of the firm to actually do something, that is to perform some important activity.
        
        a capability must be reliable and that the company should be able to repeatedly perform that activity in a consistent way.
        
        having a capability doesn't necessarily assume that the activity will be performed in a superlative manner.
      - e.g.
        
        innovative product design
        
        low cost inventory management
        
        great customer service
      - attributes
        
        they involve the deployment combination and linking of resources
        
        capability development requires learning and the embedding of this learning in organizational routines and processes
    - - 2 challenges
        
        how to organize a large set of activities into meaningful subsets?
        
        we need a way to divide these activities into groups or subsets so that analysis becomes more manageable and organized
        
        how to illustrate the relationships between these set of activities
        
        we need to figure out ways to illustrate the relationships between these activities
        
        2 solutions
        
        value chain
        
        primary activities
        
        3 more items...
        
        primarily used for manufacturing companies
        
        value network
        
        a value network is less generic in the sub categories of activities used and how they are connected with each other.
        
        major groups
        
        1 more item...
        
        building a value network is an exercise that's very customized to a company
        
        applied by services industries like airlines, telephone services, financial services, healthcare, consulting
        
        mapping important sets of activities and their relationships with each other
        
        sub groups
        
        1 more item...
        
        help to organize activities and illustrate their interrelationships
  - - - rare
      - inimitable
      - valuable
      - non-substitutable
  - - - focus on capabilities or resources
    - - focus on activities
- - - - Much more important factor
  - - - some set of rivals of the firm operating in the same industry
    - - EVA
        
        ❎
        
        Difficult to measure exactly how much value is being created for consumers by the company's products
        
        ✅
        
        Useful to capture the type of performance we're interested in
      - Accounting profits
        
        ✅
        
        Data regularly collected and readily available
        
        ❎
        
        Backward-looking, not say much on current competitive advantage and result in future better performance
      - Stock market value
        
        In principle
        
        Should incorporate the future prospects of a company in its valuation
        
        In practice
        
        might not incorporate tacit internal information and may irrational
      - Conclusion
        
        Each approaches have pros&cons,
        better to triangulate and and develop a holistic perspective
  - - - What are inter-firm differences in profitability.
    - - how can performance advantages be durable