Day 4
Grant: Review Ch. 5, Skim Ch. 9 &10
Notebook: The Right Game
Ryanair Financials
Ryanair Discussion Questions
Ducati Management Presentation
Ducati Discussion Questions

CHAPTER 5:
1) Analyzing Resources and Capabilities (internal environment) – Tools of Strategy Analysis

a) The distinction between industry attractiveness and competitive advantage as sources of a firm’s profitability corresponds to economists’ distinctions between different types of profit (or rent)

b) Resources – Productive assets owned by the firm
c) Capabilities – What the firm can do
d) Key success factors (KSFs) – Sources of competitive advantage within an industry

e) Identifying Resources
i) Tangible Resources – Easiest to identify and value: Financial resources and physical assets on the firm’s balance sheet. Route to create additional value:
(1) What opportunities exist for economizing on their use?
(2) Can existing assets be deployed more profitably? ii) Intangible Resources – More valuable than tangible resources
(1) Brand names – Reputational asset: Their value is in the confidence they instill in customers, suppliers, and business partners iii) Human Resources – Comprise the skills and productive effort offered by an organization’s employees
f) Identifying Organizational Capabilities - The firm’s capacity to deploy resources for a desired end result
i) Core competences are capabilities fundamental to a firm’s strategy and performance
(1) They make a disproportionate contribution to ultimate customer value
(2) They provide a basis for entering new markets ii) Classifying Capabilities
(1) Functional Analysis – Identifies organizational capabilities within each of the firm’s functional areas
(2) Value Chain Analysis – Identifies a sequential chain of the main activities that the firm undertakes (primary and support activities)

iii) Reutinization is essential to creating organizational capability
g) Appraising the strategic Importance of Resources and Capabilities
i) Establishing Competitive Advantage
(1) Scarcity and relevance are two important conditions ii) Sustaining Competitive Advantage
(1) Durability
(2) Transferability – If resources and capabilities are transferable then any competitive advantage that is based upon them will erode
(3) Replicability – If a firm cannot buy a resource or capability, it must build it
(4) Appropriating the returns to competitive advantage iii) Benchmarking – rating an organizations relative position

CHAPTER 9
1) Technology-based Industries and Dimensions of Competitive Advantage – Business strategy and the quest for competitive advantage
a. Innovation Process
i. Invention = Creation of new products and processes through the development of new knowledge or from new combinations of existing knowledge ii. Innovation = Initial commercialization of invention by producing and marketing a new good or service or by using a new method of production (may be one or more inventions) iii. FLOW: Basic Knowledge -> Invention -> Innovation –(supply/demand side)-> Diffusion-> Imitation or adoption
b. Profitability of Innovation
i. Regime of appropriability = Describes the conditions that influence the distribution or returns to innovation. (Strong regime – Innovator captures majority share of value created) ii. Property rights in Innovation
1. IP (Patents, copyrights, trademarks, trade secrets) iii. Tacitness of technology - (as opposed to formal, codified or explicit knowledge) is the kind of knowledge that is difficult to transfer to another person by means of writing it down or verbalizing it. (eg. Facial Recognition)
1. Complexity & tacitness are barriers to imitation iv. Lead Time – An Innovator’s lead time is the time it will take followers to catch up
v. Complementary Resources = The Diverse resources and capabilities needed to finance, produce, and market the innovation
c. Timing Innovation
i. To lead or follow? Mixed ii. Advantage of early mover (first mover advantage) depends on
1. The extent to which