1. How do you differentiate core competency from distinctive competency?

Analyzing Business Resources A resource must be a strategic factor for a company to gain competitive advantage. The resources of a company can be grouped under the following categories: 1. Financial resources 2. Human resources 3. Physical resources 4. Technological resources 5. Organizational resources The objective of the analysis is to determine which business resources contribute to the attainment of competitive advantage with which a company obtains benefits. Competitive advantage refers to a company's resources (e.g., valuable, rare, and not imitable) and its capability to obtain benefits from them and to overcome competitive forces. When a company has the core competency, it has the capability to exploit its resources at different functional levels to achieve competitive advantage. Capability refers to the ability of a company to exploit its strategic resources Competency is the integration or coordination of cross-functional capabilities. A company will gal distinctive competency when its core competency is superior over that of its rivals. Scanned with CamScanner Chapter 5 | The Internal Environment Analysis 49 The VRIO framework, which was introduced by Jay Barney, an American professor in strategic management, is an analytical tool used to evaluate a company's resources to gain competitive advantage. VRIO stands for value, rareness, imitability, and organization. The following steps are undertaken when identifying the core and distinctive competencies of a company: 1. Determine if the company has valuable resources or capabilities. 2. Scan if competitors have the capabilities to provide what customers consider valuable. 3. Assess if the company's resources or capabilities can be imitated. 4. Evaluate if the company is organized to exploit its resources and capture what customers consider valuable. 5. Assess if the company has competitive advantage. A team composed of functional managers, division chiefs, and supervisors is formed to determine the core and distinctive competencies of a company. The most effective mechanism is through a focus group discussion. The data collected from competitive intelligence become the basis for evaluating competitors. A template to assess business resources is shown in Table 5.3. Table 5.3 Business Resources Analysis Matrix44 Unit 1 | Environmental Analysis THE INTERNAL ENVIRONMENT strategic management analysis is conducted to Provide enough to with compa advantage. External environm ronment scanning or analysis alone is not enough to achieve it. Straiti managers must also consider the need to scan or analyze the internal en nal environment of a company An internal environment analysis identifies a company's internal strategic egic factors, such as gths and weaknesses, to enable it to exploit opportunities and avoid threats of the gas environment. Internal environment refers to the environment within a compelling variables are in the control of the top management within a short-run period. it consists of the folfe not strategic elements: 1. Corporate culture 2. Organizational structure 3. Business resources Corporate Culture Every company has its own separate and distinct culture. Corporate culture refers to the belips values, practices, and expectations of every member of a company on how the company conducts itself. In short, it is a company's way of doing things. It defines corporate identity. Corporate cultis is developed, nurtured, and transmitted from one generation of employees to the next. Corporate culture is one source for gaining a competitive advantage. It shapes the people within a company to produce behavioral norms, provides them with a distinct identity and belongingness and acts as a motivating factor to generate commitment among employees. Companies that have effective corporate or organizational cultures have motivated and productive employees resulting ;; less employee turnover. Effective corporate culture must be sustained. Organizational Structure The pattern of the relationships among the members of a company is depicted in its organizational structure. A company's organizational structure defines how tasks are to be performed, how resources should be utilized, and how relationships among employees should be defined. Every organizational structure has its own advantages and disadvantages. Strategic managers must thoroughly assess and evaluate the structure that is most appropriate for a company to achieve its goal effectively and efficiently. A well-defined organizational structure exhibits an effective flow of information, a well-defined control and monitoring system, and a clearly patterned chain of. command. Business Resources Resources are assets owned or controlled by a company. They can be tangible or intangible assets. Examples of tangible assets include land, processing plants, machinery, equipment, and inventory. Intangible assets are patents, trademarks, processes, formulas, and computer programs. Resources also include humans, processes, technologies, knowledge, and skills. Scanned with CamScanner DVAND Chapter 5 | The Internal Environment Analysis 45 A resource alone, however, does not provide competitive advantage to a company. It must be a strategic resource, and a company must have the capabilities to exploit it to gain competitive advantage. A resource is considered strategic when the following attributes exist: 1. It can exploit opportunities. 2. It is not common among competitors. 3. It is difficult or costly to imitate or copy. 4. There are no equivalent substitutes. When a company does not have the capability or competency to exploit strategic resources, competitive advantage can hardly be achieved.Analyzing Corporate Culture One of the best ways to assess corporate culture is to determine the present state of the individual or employee, the group or functional unit, and the entirety of a company. This is usually determined through one-on-one personal interviews with employees as individuals, team leaders, and corporate managers, as well as a survey instrument. The analysis of the internal audit will be supported by the findings from personal interviews and survey questionnaires. The objective of the analysis is to determine how corporate culture affects the formulation and adoption of proposed strategies. The range of issues and concerns to be assessed and evaluated vary from business to business. Scanned with CamScanner 46 Unit 1 | Environmental Analysis To conduct a corporate culture scanning, the following steps are to be performed: 1. Identify cultural values and core beliefs. 2. Gather information about the employees' perception of company values and beliefs 3. Rate company practices, values, and beliefs as perceived by the employees. 4. Integrate collected information from research and observation. 3. Describe the company's current culture, whether it can provide competitive advanta or not. A template to assess corporate culture is shown in Table 5.1. The details regarding corpor culture (Column A) and their elements (Column B) vary among companies. The perception of a employees on corporate culture is statistically computed. It is preferable that the data collected th be quantitatively expressed to facilitate analysis and evaluation. They are sourced mainly fra employee surveys, either through interviews or with the use of questionnaires. These data will collaborated with the available records of a company. Table 5.1 Corporate Culture Analysis Matrix Employees' Likely Ability Data and Their Perception of Corporate Elements under Sources (From Corporate of Corporate Culture to Corporate Interviews, Culture Influence Strategy Culture Remarks Culture Surveys, or Prevalent in the (Not Evident, Formulation Other Internal Company Evident, (Low, Medium, Records) or Highly Evident) or High) (A) (B) (C) (D) (E) (F) Employees welfare, growth, satisfaction, cultural diversity, and interpersonal relationships Company practices, policies, programs, and workplace environment Reward, security, recognition system, compensation, and benefits Motivation, career development, and management upport ustomer dealings d product and rvice deliveries