Summary
Summary: Anaylsing the internal environment BMNG7311
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Summary for Chapter 7, For Business Management 3A, 3rd Year
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Chapter 7 Analysing the internalenvironment
Introduction
• The rise of the so-called ‘resource-based view’ (RBV) of the organisation springs
from the strategic importance of understanding why organisations differ from each
other, and why certain organisations are more successful and more profitable than
others (Collis & Montgomery, 2005:27).
• Competitive advantage, or the lack thereof, is generally better explained by
understanding the distinctive resources and capabilities of the firm than by
understanding only its external environment.
The strategic importance of resources and capabilities
The basis of the RBV:
• Resources and capabilities determine the strategic direction of the organisation.
• Resources and capabilities are the primary sources of profit for the firm.
• Industry positioning does not explain differences in profitability between firms.
Types of rent:
• Ricardian rents are rents associated with unique resources and capabilities, e.g.
location.
• Monopoly rents are associated with a unique position in the market place, e.g.
Eskom is South Africa’s only licensed electricity utility.
• Schumpeterian rents refer to those returns appropriated by the organisation
because of a new or innovative product that allows it temporarily to charge a price
high above costs of production.
, Exploitability
• Concentrating resources
• Converging resources on a few selected strategic goals
• Focusing efforts on single priorities sequentially
• Targeting highest impact activities first
• Accumulating resources
• Mine experience to learn as quickly as possible
• Borrowing from other organisations
• Complementing resources
• Blending by linking capabilities
• Balancing
• Conserving resources
• Recycling
• Co-opting through collaboration
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