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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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Internal Analysis: Resources, Capabilities, and Core Competencies

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This chapter demonstrated various approaches to analyzing the firm’s internal environment.
Differentiate among a firm’s resources, capabilities, core competencies, and activities.
Core competencies are unique, deeply embedded, firm-specific strengths that allow companies to differentiate their products and services and thus create more value for customers than their rivals, or offer products and services of acceptable value at lower cost.
Resources are any assets that a company can draw on when crafting and executing strategy.
Capabilities are the organizational and managerial skills necessary to orchestrate a diverse set of resources to deploy them strategically.
Activities are distinct and fine-grained business processes that enable firms to add incremental value by transforming input into goods and services.
The compare and contrast tangible and intangible resources.
Tangible resources have physical attributes and are visible.
Intangible resources have no physical attributes and are invisible.
Competitive advantage is more likely to be based on intangible resources.
Evaluate the two critical assumptions behind the resource-based view.
The first critical assumption—resource heterogeneity—is that bundles of resources, capabilities, and competencies differ across firms. The resource bundles of firms competing in the same industry (or even the same strategic group) are unique to some extent and thus differ from one another.
The second critical assumption—resource immobility—is that resources tend to be “sticky” and don’t move easily from firm to firm. Because of that stickiness, the resource differences that exist between firms are difficult to replicate and, therefore, can last for a long time.
Applying the VRIO framework to assess the competitive implications of a firm’s resources.
For a firm’s resource to be the basis of a competitive advantage, it must have VRIO attributes: valuable (V), rare (R), and costly to imitate (I). The firm must also be able to organize (O) in order to capture the value of the resource.
A resource is valuable (V) if it allows the firm to take advantage of an external opportunity and/or neutralize an external threat.
A resource is rare (R) if the number of firms that possess it is less than the number of firms it would require to reach a state of perfect competition.
A resource is costly to imitate (I) if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.
The firm is organized (O) to capture the value of the resource if it has an effective organizational structure, processes, and systems in place to fully exploit the competitive potential.
Evaluate different conditions that allow firms to sustain their competitive advantage.
Several conditions make it costly for competitors to imitate the resources, capabilities, or competencies that underlie a firm’s competitive advantage: (1) better expectations of future resource value (or simply luck), (2) path dependence, (3) causal ambiguity, and (4) social complexity.
These barriers to imitation are isolating mechanisms because they prevent rivals from competing away the advantage a firm may enjoy.
How dynamic capabilities can help a firm sustain competitive advantage.
To sustain a competitive advantage, any fit between a firm’s internal strengths and the external environment must be dynamic.
Dynamic capabilities allow a firm to create, deploy, modify, reconfigure, or upgrade its resource base to gain and sustain competitive advantage in a constantly changing environment.
Apply a value chain analysis to understand which of the firm’s activities in the process of transforming inputs into outputs generate differentiation and which drive costs.
The value chain describes the internal activities a firm engages in when transforming inputs into outputs.
Each activity the firm performs along the horizontal chain adds incremental value and incremental costs.
A careful analysis of the value chain allows managers to obtain a more detailed and fine-grained understanding of how the firm’s economic value created breaks down into a distinct set of activities that help determine perceived value and the costs to create it.
When a firm’s set of distinct activities is able to generate value greater than the costs to create it, the firm obtains a profit margin (assuming the market price the firm is able to command exceeds the costs of value creation).
Conduct a SWOT analysis to combine external and internal analysis and derive strategic implications.
Formulating a strategy that increases the chances of gaining and sustaining a competitive advantage is based on synthesizing insights obtained from an internal analysis of the company’s strengths (S) and weaknesses (W) with those from an analysis of external opportunities (O) and threats (T).
The strategic implications of a SWOT analysis should help the firm to leverage its internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats.

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