What is the difference between a firm’s core competence and the firm’s strategic capabilities?
Strategic capabilities are the capacity of a firm to deploy resources to achieve a desired state. Those resources could be tangible or intangible such as the knowledge possessed by the human capital. Those capabilities are gained over time by deploying human resources and other resources available to the firm. Some of these capabilities could be distribution or marketing if the organization gained special knowledge in marketing products and building brands (Apte, Gonçalves & Yoho, 2016). Core competencies, on the other hand, are a source of competitive advantage for a firm. As the organization learns to deploy resources and capabilities, it might become better than rivals in specific areas and therefore gain a competitive advantage. Competitive advantage is sustainable if it is based on valuable capabilities, rare capabilities, costly to imitate, and non-substitutable capabilities.
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How do capabilities encompass the entire value chain?
The primary activities in the value chain are inbound logistics, operations, outbound activities, sales and marketing, and customer service. The support services are procurement, technology, human resources management, and firm infrastructure. The idea behind undertaking value chain analysis for companies is to identify sources of competitive advantage (Paradkar, Knight & Hansen, 2015). Therefore, an organization needs to deploy resources and gain skills in all areas to build competitive advantage. If an organization is able to deploy human resources and technology resources in procurement, operations, and logistics, it can create a competitive advantage over rivals by transporting goods faster and more efficiently (Crema, Verbano & Venturini, 2014). Building capabilities across the entire value chain is important because some functions are more important than others are for some companies. For instance, retail companies need to build capabilities in logistics to stand a chance against competitors in the market.
What are the four dimensions of technology strategy? State the characteristics of each dimension.
The four dimensions of the technology strategy are quality, lead-time, cost, and flexibility. A new technology should produce quality product compared to the competitors because customers are concerned about quality. Technological innovation is about iteration to produce a quality product against certain parameters such as time and efficiency. Lead-time means that an organization can reduce the time from order to delivery, so customers do not have to wait. The cost of a product is important. According to Porter’s competitive strategies, companies can compete on cost but that is only possible by deploying the right technology. Lastly, a technology that gives companies flexibility is superior to the one that does not offer the same luxury. Production systems such as total quality management, sigma, and others, seek to introduce flexibility into system but technology is important to make those approaches a success.
Regarding competitive strategy, how can technology be used defensively versus offensively?
An organization can use technology defensively to protect its market share from rivals. In defensive strategy, a firm uses technology to make an industry attractive to potential rivals by increasing the barriers of entry. By investing in new technologies and creating new standards, it makes it hard or unrealistic for a new rival to master those technologies and compete. Offensive technology also seeks to achieve the same objective by introducing changes into the industry through innovation (Mcgrath, Taenzer, Karon & Blike, 2016). Companies pursuing the strategy invest heavily in research and development to own patents to technology that supports the industry. Some companies even buy declining rivals to gain access to their portfolio of patents to keep competitors away. This strategy however might fail in the case of a disruptive innovation that makes existing technology obsolete.
Why is innovative technology insulation and an inward looking orientation a poor competitive strategy stance? Define the characteristics of a proactive competitive strategy stance.
The approach is poor because technology is changing constantly. If an organization decides to insulate itself using technology, it might be caught up in its own inward looking attitude and fail to see emerging trends. Ordinarily, innovation emerges from trends as firms seek to capitalize on how customers use products. The right approach for a firm is not to turn inwards but continuously study customers as well as examine industry wide developments (Wieland, Hartmann & Vargo, 2017). Moreover, relying too much on in-house technology might prove costly if the firm cannot adapt fast enough to emerging trends or match the quality of technology on offer in the market place. A better strategy is to collaborate with others and sometimes acquire innovate companies to gain access to critical technology.
What determines the size of a firm’s R&D Department?
The size of the R&D department is determined by many factors. One of the determinants is the firm and industry characteristics, with firms in more competitive industries investing more in R&D (Lai, Lin & Lin, 2015). Moreover, founders shape the character of an organization and therefore if the founder guided the firm to invest more in research, the company is likely to have a bigger R&D department. Despite the competitive and the role of the founder, internal finance and sales determines the ability of a firm to spare money for research (Bhupendra & Sangle, 2015). Also, if the government offers R&D tax credits and subsidies, then the incentive is present to build a larger R&D department. In companies in Silicon Valley of the United States, technology companies tend to invest more in R&D due to nearness to spillovers from university research.
Explain how experience determines capabilities and technological strategy
As firm gain experience operating in a particular industry or sector, it gains experience on what might deliver success. For instance, experience indicates that in retail sector, logistics and supply chain management might deliver success. Therefore, that information might guide the firm to develop capabilities in those two areas by directing resources in hiring the right people and investing in supportive technology (Feiler & Teece, 2014). If the technology is not available, the company might decide to develop its own proprietary technology to fill the gap. Experience is therefore about information or data, which is important in decision-making. In most industries, much of the information is unfortunately not available and companies have to get it the hard way through experience.
References
Apte, A., Gonçalves, P., & Yoho, K. (2016). Capabilities and competencies in humanitarian operations. Journal of Humanitarian Logistics and Supply Chain Management , 6 (2), 240–258. doi: 10.1108/jhlscm-04-2015-0020
Bhupendra, K. V., & Sangle, S. (2015). What drives successful implementation of pollution prevention and cleaner technology strategy? The role of innovative capability. Journal of Environmental Management , 155 , 184–192. doi: 10.1016/j.jenvman.2015.03.032
Crema, M., Verbano, C., & Venturini, K. (2014). Linking strategy with open innovation and performance in SMEs. Measuring Business Excellence , 18 (2), 14–27. doi: 10.1108/mbe-07-2013-0042
Feiler, P., & Teece, D. (2014). Case study, dynamic capabilities and upstream strategy: Supermajor EXP. Energy Strategy Reviews , 3 , 14–20. doi: 10.1016/j.esr.2014.05.003
Lai, Y.-L., Lin, F.-J., & Lin, Y.-H. (2015). Factors affecting firms R&D investment decisions. Journal of Business Research , 68 (4), 840–844. doi: 10.1016/j.jbusres.2014.11.038
Mcgrath, S. P., Taenzer, A. H., Karon, N., & Blike, G. (2016). Surveillance Monitoring Management for General Care Units: Strategy, Design, and Implementation. The Joint Commission Journal on Quality and Patient Safety , 42 (7), 293–302. doi: 10.1016/s1553-7250(16)42040-4
Paradkar, A., Knight, J., & Hansen, P. (2015). Innovation in start-ups: Ideas filling the void or ideas devoid of resources and capabilities? Technovation , 41-42 , 1–10. doi: 10.1016/j.technovation.2015.03.004
Wieland, H., Hartmann, N. N., & Vargo, S. L. (2017). Business models as service strategy. Journal of the Academy of Marketing Science , 45 (6), 925–943. doi: 10.1007/s11747-017-0531-z
