slide 9

1. ChapterThree
Assessing the Internal
Environment of the
Firm

2. CHAPTER 3
McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC MANAGEMENT  Gregory G. Dess and G. T. Lumpkin
After studying this chapter, you should have
a good understanding of:
• The benefits and limitations of SWOT analysisbenefits and limitations of SWOT analysis in conducting an
internal analysis of the firm.(e.g., Cambodia Angkor Air)
• The primary(PA) and support activities(SA) of a firm's value chain.
 How value-chain analysis can help managers create value by investigatinginvestigating
relationships amongrelationships among activities within the firm and among the firm and itsactivities within the firm and among the firm and its
customers and supplierscustomers and suppliers.
• The different types of tangible and intangibletangible and intangible resources, as well as
organizational capabilities.(e.g., M&V company)
• The four criteriafour criteria that a firm's resources must possesspossess to maintain a
sustainable advantage.(e.g., OMC company)
• The usefulness of financial ratio analysis as well as its inherent
limitations.
• How to make meaningful comparisons of performance across firms.
• The value of recognizing how the interests of a variety of
stakeholders can be interrelated.
Learning
Objectives
TRANSPARENCY-20

3. SWOT analysis
Organization’sOrganization’s
OpportunitiesOpportunities
 Strengths(Strengths(1)1)
A firm's strengths are its resources and capabilities that can be used as
a basis for developing a competitive advantage. Examples of such
strengths include: patents ; strong brand names; good reputation
among customers
;cost advantages from proprietary know-how; exclusive access to high
grade natural resources & favorable access to distribution networks
External Analysis(Ch.2)External Analysis(Ch.2)
Opportunities & threats
(OT)
8-8-33
 Weaknesses(Weaknesses(2)2) :: The absence of certain strengths may be viewed
as a weakness.
e.g., each of the following may be considered weaknesses:
 lack of patent protection ;a weak brand name ; poor reputation
among customers
 high cost structure
Internal Analysis(Ch.3) :
Organization’s
Resources/Capabilities(SW)
 The SWOT analysis provides information that is helpful in matching the firm's
resources and capabilities to the competitive environment in which it operates. As
such, it is instrumental in strategy formulation and selection. The following
diagram shows how a SWOT analysis fits into an environmental scan:
Conclusion _Conclusion _The EE analysis may reveal certainThe EE analysis may reveal certain
new opportunities for profit and growthnew opportunities for profit and growth and alsoand also
may presentmay present threatsthreats to the firm :to the firm :
 OpportunitiesOpportunities (3)include:
 an unfulfilled customer need; arrival of new
technologies; loosening of regulations
 removal of international trade barriers
 Threats(4)Threats(4) include:include:
 shiftsshifts in consumer tastes away from the firm'sin consumer tastes away from the firm's
productsproducts
 emergence ofemergence of substitute productssubstitute products
 new regulations ; increased trade barriersnew regulations ; increased trade barriers

4. keep watching on
their
overall business
environment from
Threats(4)..grasp
opportunities(3)
strengths that need
to maintain(1):
firm's resources and
capabilities
Benefits of
SWOT
Analysis
correct its
weaknesses(2)
SWOT help Corporate strategic planning as following:SWOT help Corporate strategic planning as following:
• It is a source of information for strategic planning _ builds organization’s strengths(1) & reverse company’s weaknesses_ improvement a policy: reputation
among customers & cost structure (2)
• Overcome organization’s threats & Maximize company’s response to grasp Opp(3).
– It helps in identifying core competencies of the company and knowing past, present and future situation( boundary firm's resources and capabilities)(4)
– It concentrates on the issues that potentially have the most impact (Whole Aspects: A linkage exists if the performance or cost of one activity affects that of another)
– It helps in forecasting the changing trends& events and decision-making process that can result in either a cost advantage or a differentiation advantages.(outsourcing decision)
– Grasp_ способность быстрого восприятия; понимание

5. Limitation of SWOT AnalysisLimitation of SWOT Analysis
o ExternalExternal Limitation as followingLimitation as following::
− SWOT does stress upon the four aspects of S.W.O.T, but it does not tell
how an organization can identify these aspect to improve its self.
– SWOT’s focus on the external environment is too narrow
– SWOT gives a One Shot View of a Moving Target.
– SWOT can not show company how to achieve a competitive advantage.
– SWOT is a best tool when used as guide(stable E.), but not as a
prescription(неписаный закон).
o InternalInternal limitation as following:limitation as following:
– Insufficient research and development facilities(outspending rivals on R&D)
– Lack of skilled and efficient labours or leadership(e.g., lack of confidence
on leadership: such as no commitment to the organization; Lack of motivation;
Low efficiency(tracking record);Less influence from leaders to followers )
– Faulty products due to poor quality control
– Poor industrial relations(linkage between functional activities flows used to
isolate the individual value-creating activities.).

6. Strategic SWOT Matrix
S
O
W
T
Aggressive Strategy (S-O)
-Attack fast and hard :
S-O strategies pursue
opportunities that are a good fit to
the company's strengths.(e.g., ..)
Turnaround Strategy (W-O)
-Try to quickly overcome the
weaknesses while pursuing
the new opportunities(first into
market, e.g.,…..)
Defensive Strategy (S-T)
-Get ready for impact
-Be more conservative(supportive)
-Leverage our strengths to
overcome(win) the threats
S-TS-T strategies identify ways that the firm can
use its strengths to reduce its vulnerability
to external threats.
Retrenchment Strategy (W-T)
W-T strategies establish a defensive plan to
prevent the firm's weaknesses from making
it highly sensitive to external threats.
Retrenchment Strategy used by corporations to reduce the diversity
or the overall size of the operations of the company. This strategy is
often used in order to cut expenses with the goal of becoming a more
financial stable business. Typically the strategy involves withdrawing
from certain markets or the discontinuation of selling certain products
or service in order to make a beneficial turnaround.
(e.g., Government support _ Regulation on rice import:
tax_17%, price_$300 to $600/per tone, subsidiary_$30mln)

7. Summary Internal Analysis(IA)Summary Internal Analysis(IA)
Resources(T&I)
firm-specific assets
Capabilities(VRIN)
refer to the firm's ability to utilize its
resources effectively
Distinctive
competencies:
Competitive
advantage
(C or D )
Value
Chain(identify
internal potential
for creating value)
PA
_Generic
SA_ Specific
IA
Chapter 3.Dr. Phea Vanna 2014
Value
Creation
 Patents and trademarks
 Proprietary know-how(innovation)
 Installed customer base
 Reputation of the firm
 Brand equity
R&CR&C
E.g.. innovation, efficiency, quality,
and customer responsiveness,

8. Illustrates Porter’sPorter’s value chain
Dr.PHEAVanna2012
Exhibit 3.1
PA_ the goal of these five categories are generic and portrayed here in a general manner(includes
activities that vary by industry) to create value that exceeds the cost of providing the product or service
( to be vital in developing a competitive advantage).
SA_SA_ the details of which are industry-specific: : 1.By themselves (Backward &
forward vertical integration strategy_ cost aspect& control aspect ) & 2.Through important
relationships with PA and other support activities.

9. Value Chain Analysis
 In order to better understand the activities leading to a competitive
advantage, one can begin with the generic value chain(PA) and then identify
the relevant firm-specific activities(SA). Process flows can be mapped, and
these flows used to isolate the individual value-creating activities.
 Once the discrete(isolate) activities are defined, linkages between
activities should be identified to utilize Vertical integration strategy. A
linkage exists if the performance or cost of one activity affects that of another
(cost aspect). Competitive advantage may be obtained by optimizing and
coordinating linked activities_ cost advantage through MES for barriers to entry .
 The value chain also is useful in outsourcing decisions. Understanding the
linkages between activities can lead to more optimal make-or-buy decisions
that can result in either a cost advantage or a differentiation advantage.
 And so, The value chain can help managers create value by researching
& investigating, designing products, production &marketing………
relationships among activities within the firm and among the firm and its
customers and suppliers service after sale( Focus on the firm’s
competitive position through Primary& Support activities: C or D).
Dr.PHEA Vanna 2016

10. Value chain : Primary Activities
I.I. Primary activitiesPrimary activities:: refer to physical creation of
product or service : its sale and transfer to
buyer(or its service after sale including
Inbound logistics, operations, outbound
logistics, marketing and sales, and service)
Dr.PHEA Vanna 2016

11. CHAPTER 3
McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC MANAGEMENT  Gregory G. Dess and G. T. Lumpkin
• Location of
distribution
facilities to
minimize shipping
times(e.g., ASEAN
Comu-ty_ Ø1’h3)
• Excellent material
and inventory
control systems
( e.g., Toyota JIT )
Systems to reduce
time to send
“returns” to
suppliers(effective
shipping )
Warehouse layout
and designs to
increase efficiency
of operations by
received incoming
materials (e.g., Oil
processing in
Singapore)
The Value Chain:The Value Chain: Some Factors to ConsiderSome Factors to Consider inin
assessing a Firm’sassessing a Firm’s Primary ActivitiesPROFIT
MARGIN
Exhibit 3.2
TRANSPARENCY-22
• Efficient plant
operations to
minimize costs
• Quality prod-ion
control systems to
enhance quality
(e.g., Sony Co.)
Efficient plant
layout and
workflow design
(skill in designing
products )
Appropriate level
of automation in
manuf-ing (high
level of expertise in
manuf-ing process
engineering )
• Effective shipping
processes to provide
quick delivery and
minimize damages &
Efficient finished
goods warehousing
processes
Shipping of goods in
large lot sizes to
minimize
transportation
costs(Esc)
Quality material
handling equipment
(efficiency
management) to
increase order picking
differentiate services
support: e.g., deliver
services _ by air or
land)
• Highly motivated and
competent sales
force(sales activities
by firm members)
• Inducements to
influence the
purchases include:
Innovative
approaches to
promotion and
advertising
(Initiative) :HOW
Selection of most
appropriate
distribution channels
(WHO: by Gove-nt or
Private associative
Groups)
Specific
identification of
customer segments
and needs(WHAT)
Effective pricing
strategies(Tactic of
Competitive Price)
•Effective use of
procedures to request
customer feedback and t
act on information
Quick response to
customer needs and
emergencies(e.g.,Toyota
have Ability to furnish
(support) replacement
parts as required
•Effective management :
Quality of service
personnel ongoing
training
Providing service to
enhance or maintain
product value (e.g.,
enhance product quality
by adding service such as
installation…… )
Appropriate warranty
and guarantee Policies
Summary Service:
prefer to Firm’s Policies
and Procedures .

12. Value chain: Support activities
II.II. Support activitiesSupport activities the details of which are industry-
specific:
 Procurement , technology development, human
resource management, and general
administration .
1. By themselves (e.g. McDonald Company _
strategic backward & forward vertical integration) or
2. Through important relationships with primary and
other support activities(mix both P&S activities)
Dr.PHEA Vanna 2013

13. CHAPTER 3
McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC MANAGEMENT  Gregory G. Dess and G. T. Lumpkin
The Value Chain: Some Factors to Consider
in Assessing Firm’s Support Activities
Source: Adapted
with permission of
The Free Press, a
division of Simon &
Schuster, Inc., from
Competitive
Advantage: Creating
and Sustaining
Superior
Performance by
Michael E. Porter.
Copyright © 1985,
1998 by Michael E.
Porter.
Exhibit 3.3
• Effective planning systems to attain overall goals and objectives (SL)
• Ability of top management to anticipate and act on key environmental trends and events(SL_ OT)
• Ability to obtain low cost funds for capital expenditures and working capital(SL_ Resource allocation)
• Excellent relationships with diverse stakeholder groups or suppliers (IS_ decision making)
• Ability to coordinate and integrate activities(PA&SA) across the “value system”(IS can help managers create value by investigating
relationships among activities )
• Highly visible to inculcate(внедрять) organizational culture, reputation, and values(SL)
• Effective recruiting, development, and retention mechanisms for employees
• Quality relations with trade unions
• Quality work environment to maximize overall employee performance and minimize absenteeism
• Reward and incentive programs to motivate all employees
• Effective research and development activities for process and product initiatives
• Positive collaborative relationships between R&D and other departments
• State-of-the art facilities and equipment
• Culture to enhance creativity and innovation
• Excellent professional qualifications of personnel
• Ability to meet critical deadlines
• Procurement of raw material inputs to optimize quality, speed and minimize the associated costs
• Development of collaborative “win-win” relationships with suppliers
• Effective procedures to purchase advertising and media services
• Analysis and selection of alternate sources of inputs to minimize dependence on one supplier
• Ability to make proper lease versus buy decisions
PROFITMARGIN
General Administration
Human Resource Management
Technology Development
Procurement
TRANSPARENCY-23
Conclusion_ Support activities often are
viewed as "overhead", but some firms
successfully have used them to develop
a competitive advantage, for example, to
develop a innovative management of
information systems or enable innovation,
efficiency, quality, and customer
responsiveness, all of which can be
leveraged to create a cost advantage or a
differentiation advantage..

14. Procurement
• All activities related to the arrangement(plan) for
purchasing the raw materials and other inputs(includes
HRD , process automation, and other TD) used in the firm’s value
-creating activities: such as qualifying new suppliers(Q?),
purchasing different groups of inputs(c?), and monitoring
supplier performance (Q ?, C & logistic system?).
 E.g., Through Nehru government have decided to invest in HRD(in early years
1951-1963) with focus on industry-specific knowledge(e.g. IT,…), India’s
universities and software firms have literally this essential factor of production .
(Thus, India produces the second largest annual output of scientists and engineers in
the world, behind only the USA,2006 ).see into footed note
 E.g., Microsoft plan $400 million to invest in new research partnerships in India
,2006 ( Large pool of skilled labor from 800800 companiescompanies are involved in software
services _ Low salaries and English-language capability & to employ 2.2 million
IT proficiency by 2008). Dr.PHEA Vanna 2013
Value chain: Support activities

15. Procurement factors to consider in assessing a firm’s SA
• Procurement of raw material inputs to optimize quality,
speed and minimize the associated costs( reduce the shipping time.)
• Development of collaborative “win-win” relationships with
suppliers(e.g., suppliers wanted to GET and that firms wanted to
GIVE: Reputation with suppliers for fairness, non-zero sum relationships)
• Effective procedures to purchase advertising and media services
• Analysis and selection of alternate sources of inputs to
minimize dependence on one supplier(Q& Min the costs : Nike Co.)
• Ability to make proper(owner) lease versus buy decisions(GM)
 e.g., lower labor(Nike’s decision to source the manufacturing such as
China , VN, and Indonesia_ Quality) and minimize operating costs(decision
of many multinational companies to set up production operations such as
GM)
Dr.PHEA Vanna 2012

16. CHAPTER 3
McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC MANAGEMENT  Gregory G. Dess and G. T. Lumpkin
The Value Chain: Some Factors to Consider
in Assessing Firm’s Support Activities
Source: Adapted
with permission of
The Free Press, a
division of Simon &
Schuster, Inc., from
Competitive
Advantage: Creating
and Sustaining
Superior
Performance by
Michael E. Porter.
Copyright © 1985,
1998 by Michael E.
Porter.
Exhibit 3.3
• Effective planning systems to attain overall goals and objectives (SL)
• Ability of top management to anticipate and act on key environmental trends and events(SL_ OT)
• Ability to obtain low cost funds for capital expenditures and working capital(SL_ Resource allocation)
• Excellent relationships with diverse stakeholder groups or suppliers (IS_ decision making)
• Ability to coordinate and integrate activities(PA&SA) across the “value system”(IS can help managers create value by investigating
relationships among activities )
• Highly visible to inculcate(внедрять) organizational culture, reputation, and values(SL)
• Effective recruiting, development, and retention mechanisms for employees
• Quality relations with trade unions
• Quality work environment to maximize overall employee performance and minimize absenteeism
• Reward and incentive programs to motivate all employees
• Effective research and development activities for process and product initiatives
• Positive collaborative relationships between R&D and other departments
• State-of-the art facilities and equipment
• Culture to enhance creativity and innovation
• Excellent professional qualifications of personnel
• Ability to meet critical deadlines
• Procurement of raw material inputs to optimize quality, speed and minimize the associated costs
• Development of collaborative “win-win” relationships with suppliers
• Effective procedures to purchase advertising and media services
• Analysis and selection of alternate sources of inputs to minimize dependence on one supplier
• Ability to make proper lease versus buy decisions
PROFITMARGIN
General Administration
Human Resource Management
Technology Development
Procurement
TRANSPARENCY-23
Conclusion_ Support activities often are
viewed as "overhead", but some firms
successfully have used them to develop
a competitive advantage, for example, to
develop a innovative management of
information systems or enable innovation,
efficiency, quality, and customer
responsiveness, all of which can be
leveraged to create a cost advantage or a
differentiation advantage..

17. Technology development(TD)
• Knowledge, techniques characteristic ,
processes, procedures and methods used at
various stages of the value chain.
TD include research and development, component
design, feature design, field testing, process
engineering, and other TD used to support theused to support the
value-chain activitiesvalue-chain activities(refer to cost advantages)
e.g., competition between Surface and iPad mini ?
 feature _особенность, техническая характеристика Dr.PHEA Vanna 2016

18. TD factors to consider in assessing a firm’s SA)
• Effective R&D activities for process and product initiatives (e.g.
Microsoft spend 4.1 Bn on R&D,2006)(1)
• Positive collaborative relationships between R&D and other
departments or partnerships (2)_ e.g., India ,Cambridge University and
China_ procedures of field testing
• Base on (1&2) : Appropriate culture to enhance creativity and
innovation products & services in two major areas: performance material
(e.g., Cost of activities linkage ) & Control systems of quality.( slides#33-34)
• Excellent professional qualifications of personnel(Professional Talent)
• Ability to meet critical deadlines(e.g., Project is completed on time
involves planning and preparation: see into footnoted)
 CEO can lower barriers to entry, reduce minimum efficient production levels
(MES), and influence outsourcing decisions. )
 e.g., Microsoft’s decision to establish a cooperated research laboratory in Cambridge, as
software development cooperation with other firms in talent-rich India. So, the Strategy
provide Microsoft with access to outstanding technical and professional talent(can effect
the quality of external & internal coordination areas).

19. Human resource management (HRM)
• HRM consist of activities involved in the
recruiting, hiring, training, development,
managerial role models and compensation of all types
of personnel(Clear alignment of rewards with goals and
objectives)_Growing from boundaries to rewards
and culture:
 Culture provides implicit(understood) proscriptions on behavior(запрещённое поведение)
 Boundaries provide explicit(clear) proscriptions on behavior
 RewardsRewards designed to support behavior with organizational goals
• Supports both individual P and S activities used to support the
entire value chain
Dr.PHEA Vanna 2016

20. HRM Factors to Consider in assessing a firm’s SA)
• Effective recruiting, development, and
retention (saving)mechanisms for employees
(Considering from boundaries to rewards and culture)
• Quality relations with trade unions ( focus on Internal & External
labor supply to firm. e.g., Cam-labours to Southern Korea)
• Quality work environment to maximize overall
employee performance and minimize absenteeism .
 (e.g., Labor markets in ASEAN_280 million,2012est. : The AEC has the potential to
accelerate growth by facilitating the freer movement of skilled workers. Consequently
too many workers are trapped in poor quality jobs. Approximately 179 million workers
(or three in five) are in vulnerable employment, (2013 or most recent year ) and 92
million earn too little to escape poverty.)
Dr.PHEA Vanna 2010

21. General administration(GA)
Including activities such as general management ,
planning, finance, accounting, legal and government affairs:
Quality management (e.g., Strong and effective
leadership(SL): Carlos Ghosn is one of today’s top
corporate leaders after his turnaround of Nissan( 3 major
types of restructuring)
 Information systems(IS)_ can also play a key role
increasing operation efficiencies(outputs) and enhancing a
firm’s performance (profits) :e.g., Project-management
software (cost advantage):Managers looking to put a team together
will be able to go online, describe the project, and receive
recommendations for available people who would fit their
requirements. So, you recruit, form teams, and assign work to others
due to competitive envir-t.
Dr.PHEA Vanna 2015

22. GA factors to Consider in assessing a firm’s SA)
•Effective planning systems to attain overall goals and objectives (SL)
•Ability of top management to anticipate and act on key
environmental trends and events(SL &IS : OT)
•Ability to obtain low cost funds for capital expenditures and
working capital(SL_ Resource allocation)
•Excellent relationships with diverse stakeholder groups or
suppliers (IS_ decision making)
•Ability to coordinate and integrate activities(PA&SA) across the
“value system”(IS can help managers create value by
investigating relationships among activities )
•Highly visible to inculcate(внедрять) organizational culture,
reputation, and values(SL) Dr.PHEA Vanna 2010

23. Summary Internal Analysis(IA)Summary Internal Analysis(IA)
Resources(T&I)
firm-specific assets
Capabilities(VRIN)
refer to the firm's ability to utilize its
resources effectively
Distinctive
competencies:
E.g.. innovation,
efficiency, quality,
and customer
responsiveness,
Value
Chain(identify
internal potential for
creating value)
PA
SA
IA
Chapter 3.Dr. Phea Vanna 2014
Value
Creation
 Patents and trademarks
 Proprietary know-how
 Installed customer base
 Reputation of the firm
 Brand equity
R&CR&C

24. The RBV of Firm: Resources and Capabilities
Financial • Firm’s cash account and cash equivalents(e.g.,
Benefit from reputation.,…)
• Firm’s capacity to raise equity
• Firm’s borrowing capacity(ability to borrow funds)
Physical • Modern plant and facilities(P&S activities)
• Favorable manufacturing locations
• State-of-the-art machinery and equipment
Technological • Trade secrets
• Innovative production processes(e.g., … )
• Patents, copyrights, trademarks
Organizational • Effective strategic planning processes
• Excellent evaluation and control systems
Tangible Resources
Source: Adapted
from J.B. Barney,
1991, Firm
resources and
sustained
competitive
advantage, Journal
of Management,
17: 101; R.M.
Grant, 1991,
Contemporary
Strategy Analysis
(Cambridge, U.K.:
Blackwell
Business), 100-
102. Hitt, M.A.,
Ireland, R.D. &
Hoskisson, R.E.
2001. Strategic
Management:
Competitivenesss
and Globalization.
Fourth Edition.
South-Western
College Publishing:
Cincinnati, Ohio.
Exhibit 3.4
Human
• Experience and capabilities of employees
• Trust
• Managerial skills
• Firm-specific practices and procedures
Innovation
and
creativity
• Technical and scientific skills
• Innovation capacities
Reputation • Brand name
• Reputation with customers for quality and reliability
• Reputation with suppliers for fairness, non-zero sum relationships
Intangible Resources
Organization Capabilities refer to the
firm's ability to utilize its resources
effectively:
• Firm's competences or skills of employs
(Experience and capabilities of employees) to
transfer inputs to outputs(VRIN: e.g.OMC)
• Capacity to combine tangible and
intangible resources, using organizational
processes to attain desired Goal.
Outstanding customer service(e.g. Toyota)
Excellent product development capabilities
(e.g. Apple co., Sonny)_quality
Innovativeness of products and services
Ability to hire, motivate, and retain human
capital_ increasing operation efficiencies
And so, the firm'sAnd so, the firm's resources andresources and
capabilitiescapabilities together form its distinctivetogether form its distinctive
competencies. These competenciescompetencies. These competencies
enable(enable(innovation and creativity ,innovation and creativity ,
efficiency, quality, and customerefficiency, quality, and customer
responsivenessresponsiveness).The following are some).The following are some
examples of such as:examples of such as:
TRANSPARENCY-24

25. Company’s profile
- A subsidiary of M&V Group based in HK, which M&V Group has branch in
China, Macao, and Cambodia
- M&V was established in Cambodia since 1994,
- QIP (Qualified Investment Project) with 100% shares from abroad, also is the
first foreign investment garment running business as a knitting factory with fullknitting factory with full
experience from head officeexperience from head office.
- Types of company: private limited company with two shareholders :700/1000
shares and 300/1000 shares.
- M&V Cambodia has four branches, 03 in PP and the remaining 4 at
Kampong Chnang Province.
- M&V employed more than 8,000 employees,2010
- M&V Cambodia main business activity is producing knitted sweater, from
normal production to complicatenormal production to complicate production such as sweater with silkscreen, embroidery
- the challenge task in knitting production( equipped with modern technology such as
computerized knitting machine, sewing machine, washing machine, dyeing machines and
etc.)

26. 3.1 Tangible resources
- Financial resources:
. Firm’s cash account and cash equivalents.
The company has sufficiency cash both on hand and bank for daily operation
including for payment to purchasing raw material, employee’s salary, and other
overhead expense.
. Firm’s capacity to raise equity or firm’s borrowing capacity
 Type of company is private limited company may be raising fund through
issuing the securities or selling the firm's specific assets, or getting credit from
the bank.: M&V have exclusive right_ Since it has head office at HK with
many years ago of establishing history that why it is easy for the company to
borrow money from bank, also with more than ten years operation history in
Cambodia, M&V Cambodia has also being provided a special condition from
Union Commercial Bank by allowing the factory to overdraft without any
depositing of fixed assets. (e.g., Reputation with supplies for fairness, non-zero
sum relationships more than ten years operation history in Cambodia)
The RBV of Firm's Resources and Capabilities

27. - Physical resources:
. Modern plant and facilities_ Two of the four branches of M&V
Cambodia has a modern buildings, it is locate at 3 plants in PP which has
five story building and 03 big plant full equipped with machinery, and 4
plants at Kompong Chnang has 03 story building and 10 large ground floor
building where also full equipped with machinery including the latest
technology of computerized knitting machine which can run production as
much as order from client.(Reputation with customers for quality and
reliability)
. Favorable manufacturing location _Besides above modern plant
and facilities, the factory also located at the efficiency location where never
happen natural disaster such as flood, typhoons…
. State-of-the-art machinery and equipment_ Although M&V
Cambodia has long been established, but all machinery And equipment are
routinely upgraded and replaced with modern one, so it is the strong point _
lead to standard (Q)and economics of scale of products( cost advantages).

28. - Technological resources:
. Trade secrets
. Innovative production processes
. Patents, copyrights, trademarks
Since M&V Cambodia provide the manufacturing services to world
famous brand such as H&M, GAP, …so for technological resources it
consists only basic items like innovative production processes to create
new and up to date style for supplier only.
- Organizational resources:
. Effective strategic planning processes_ Make to operation run smoothly, the
management team have set a systematic production process in accordance with buyer’
order, it have set that from the date of received invoice, it take 07 days to purchase raw
material from abroad and transport to Cambodia, after the material arrive factory’s
warehouse it will need 15 days more for production process ranging from knitting,
sewing, dyeing, washing and finally packing.
. Excellent evaluation and control systems
 M&V Cambodia have been using to 360o
method to evaluate its own employee,
with a strict internal regulation but abide with the labor law.

29. 3.2 Intangible Resources:
 Human:
. Experience and capabilities of employees_ With over ten years , M&V is full with
experience & high skills employees, especially workers in each department they know well
about each kind of models and style of every products. In additional their productivity also
getting higher from day to day.
. Trust_ With many year experiences in this field and in addition to its commitment
with labor law, M&V Cambodia have been widely recognized as the one of the biggest
reliable entity in this industry.(Locally & internationally customers )
. Management skills(technique)_ Management not only focus on medium and high
ranking officer, but Also the low level such as team leaders have also been trained by skillful
trainer on IE (Industry Engineering)
. Firm-specific practices and procedures_ In practices, M&V have equipped most
of its production procedure with technology such as the control of each workers productivity
by scanning everyone outcome into computer after they have completed their own job.
Furthermore to be able control every worker attendance it has use card scanning system for
time in- out.

30.  Innovation and creativity:
. Technical and scientific skills
. Innovation capacities
 M&V Cambodia not only produce simple knitted sweater but also make a complicated
and up to date style sweater such as silkscreen sweater and embroidery sweater, more over
M&V have spent many money on R&D department and also encourage all employees to
make creativity by preparing annual sweater design competition.
 Reputation:
. Brand name
. Reputation with customers for quality and reliability . Reputation
with supplier for fairness, non-zero-sum relationships
 M&V was recognized as one of the biggest manufacturing in Cambodia in knitting
sweater with 02 big production sites, one in Phnom Penh and another one at Kampong
Chnang. (Locally customer)
 M&V have also been famous as one of the most full complied with Labor law
garment by getting a lot of reward from many institutions including the Third Prize Winner
of the World most favor factory from Tesco buyer in 2010.(Internationally customers )

31. 3.3 Organizational Capabilities:
Outstanding customer service
. Since customer was considered as the king, so service have been fully provided to
all customers both large & small customer.
Excellent product development capabilities
. M&V Cambodia have enough human resource, technology, skill & location to
provide the up to date style of sweater to customer with high quality and efficiency , because
all workers are full with experience (HR & Technology)
Innovativeness of products and services
. M&V Cambodia encourage local staff to try to innovate and design new model of
sweater to submit to suppliers.
Ability to hire, motivates, and retains human capital
. M&V Cambodia have hired many full capacity employees and also motivated them
by promoting such as some of local team leader have been promoted to become supervisor
which this kind of position provide to foreign staff only. The factory also has policy to retain
human resource by providing the bonus every year. The most precise(exact) policy was so
clear after the general manager have decided and declared to select University student to train
as assistant to factory manager and assistant to other foreign chief department in order to
encourage local human resources( Mutual opportunity _ lead to improve the quality and
efficiency ).

32. VRIN
.►Financial Resource : Capital 22 million
dollars
(100% Share by OMC)
.►Physical Resource : Fixed & Current Assets
(office building and plant)
(Own by OMC)
.► Human Resource : Full Capacity of top Leader,
manager, technicians &
workers
.► Patent :Company Brand Image,
Exclusive right to distribute SHARP and
SUZUKI

33. Company’s profile
► OMC, a sole proprietorship, established in 1997
► Initially as copier shop, then became exclusive
distributer of SHARP
► Up to now, it is an exclusive distributer of SHARP
and SUZUKI products
► Main business activities include
1. Sales of Suzuki Automobile & Motorcycles
2. SHARP Products (washing machine, air
conditioner, Fridges, TV, DVD, microwave oven, etc.)
3. Office furniture
4. Building for rent

34. Valuable
.► Capital = 22 M Dollars
(100% Share by OMC)
.► Assets = Own by OMC
.► Patent = Good Image
.► Human Resource = Leader, Manager & Operation Staffs
Resources that are valuable for OMC to formulate and implement
strategy and stimulus business activities are tangible resource: financial
resource (Capital 22 Million Dollars), physical resources (office building
and plant) and intangible resources including human ranging from
management team to drivers, patent and company brand name.
 All of these resources have taken part in setting up
management strategy and accelerating OMC business activities
to be stronger.
Def. Valuable _resources that help firm to employ a value creating strategy for
products or services by either outperforming its competitors or reduce its own
weakness).

35. Rare
Rare_ refer to bundles of valuable firm resources that are used to formulate
and develop strategies.
►Human Resource: (reward system and motivation)
OMC can maintained skillful and productive workers,
ranging from drivers to office worker[This become rare]
 Reward System:
It is the rare activities if compared to other companies,
OMC provides monthly incentive to sales & marketing staff
as well as delivery & warehouse staffs whenever their
achievement attained minimum target.

36. Rare cont.
Motivation: For potential staffs who had long past
experience with OMC they were motivated by reasonable salary
and promote them to be higher level position.
e.g., OMC, Drivers are promoted to be seller or marketing
staffs, marketing staffs are promoted to be brand manager etc...
So, this is very rare activities when other companies hesitate
to implement such system.
Managing Director Manner: top management played the
role as manager, staffs to involve all business operations .
Different from others, big boss of OMC, has been working very closely
with all departments which deeply involved in every business activities and
operations including leadership, decision maker up to manager .

37. Difficult to Imitate
.►Exclusive Right Obtaining:
Under flexible leadership of Mr. Siv Thay and hard
negotiation with SHARP Japan, OMC obtained exclusive
right distribute and provide service of SHARP Products
in Cambodia (Monopoly). Also, in 1998, OMC lobbied Suzuki to provide
distributor right to OMC exclusively.
.►Service Campaign:
OMC have yearly conducted the service campaign by
cooperating with technicians from Suzuki Japan provide
free service checking and engine oil & oil filter to all customers. Periodical
innovation and design strategies can make other competitors difficult to follow up.

38. Difficult to Substitute
►Plasma Cluster Technology:
Sharp plasma cluster (Ion+/- ) is exclusive technology established by SHARP Japan
equipped in SHARP home consumer products such as Air-conditioner, Refrigerator,
Washer, Ion Generator, Humidifier(e.g.,увлажнитель воздуха) etc...
►Specific Knowledge:
Human Resource: Skillful technicians who provide after-sale service can completely
satisfy and fulfill customers’ feedback:
Quality of service personnel
Quick response to customer needs and emergencies

39.  Good Relation:
 Firm ability to make good relationship
with all stakeholders can help gain
company’s image from time to time in
local and international arena(ASEAN
market)

40. CHAPTER 3
McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC MANAGEMENT  Gregory G. Dess and G. T. Lumpkin
How Resources and Capabilities Lead
to Advantages
•Lower costs and higher quality of goods sold
•Fewer levels of hierarchy
Capabilities
•Customer recognition with minimal advertising
•No promotional sales
•Lower labor turnover 8.7% labor costs versus 10%-
20% industry average
Intangible
•1% of revenues allocated to occupancy costs versus 3%
to 9% industry average )
Tangible
Competitive Advantages in Great
Britain
Resource
Ownership (vs. leasing)
of property
Brand reputation
Employee loyalty
Supplier chain
Managerial judgment
Source: Adapted
from Collins, D. &
Montgomery, C.
1995. Competing
on resources:
Strategy in the
1990s. Harvard
Business Review,
73(4): 123.
Exhibit 3.5
TRANSPARENCY-25

41. 68
Figure1.Production Concepts Included in JITFigure1.Production Concepts Included in JIT
JIT
Elimination
of waste
Value-added
manufacturing
Employee
involvement
Problem
discovery and
prevention
Reduced
cycle times
Perfect
quality
to better serve the
customer by
providing higher
levels of quality
and service.

42. Operations(O)
• Includes all activities associated (related) with
transforming inputs into final product form
• Such as machining, packaging,
assembly(design), testing, printing, facility
operations
Dr.PHEA Vanna 2010

43. O Factors to Consider in assessing a
firm’s PA)
• Efficient plant (factory) operations to minimize
costs or operating costs
• Appropriate level of automation in
manufacturing (authority to decide the problems)
• Quality production control systems to reduce
costs and enhance quality
• Efficient plant layout (plan) and workflow
design(strategies & structures)
Dr.PHEA Vanna 2010

44. Outbound logistics(OL)
• Collecting(methods), storing, and
distributing product or service to buyers
• These activities include finished goods,
warehousing, material handling, delivery
vehicle operation, order processing, and
scheduling.
 Delivery _ доставка, поставка
Dr.PHEA Vanna 2010

45. OL factors to consider in assessing a
firm’s PA
• Effective shipping processes to provide quick
delivery and minimize damages
• Efficient finished goods warehousing processes
(in transferring process to buyers)
• Shipping of goods in large lot sizes to
minimize transportation costs(by air , boats and land)
• Quality material handling equipment(efficiency
management) to increase order picking (выбор)
Dr.PHEA Vanna 2010

46. Marketing and sales(MS)
• Purchases of products and services by end
users,
• sales activities by firm members,
• and inducements to influence the purchases:
Include advertising , promotion , channel
selection and pricing(competitive tactics)
 inducements _стимул
Dr.PHEA Vanna 2010

47. MS (Factors to Consider)
• Highly motivated and competent sales force
• Innovative approaches (initiatives) to
promotion and advertising(e.g. Beer promotion
workers)
• Selection of most appropriate distribution
channels(e.g., mass media or NGO…. )
• Proper(specific) identification of customer
segments and needs(who & what to satisfy)
• Effective pricing strategies(price tactics)
Dr.PHEA Vanna 2012

48. Service
• Providing service to enhance or maintain
product value
• Such as installation, repair, training, parts
supply, product adjustment (к изменяющимся
условиям).
Dr.PHEA Vanna 2010

49. Service (Factors to Consider in assessing a firm’s PA)
• Effective use of procedures to request customer
feedback and to act on information(see the below handout )
• Quick response to customer needs and emergencies
• Ability to supply replacement parts as required(Toyota service)
• Effective management (techniques)of parts and equipment inventory :
– Quality of service personnel and ongoing training
– Appropriate warranty and guarantee policies
 e.g., if you go to good &great hotel _ ask for something ,you get it &you don’t
even have to ask “ To fulfill this goal”: point of idea uses guest-recognition
database to track guest such as preferred floor and newspaper, such as
housekeepers ,who track events like a guest’s moving a desk to get a
better view, and arranged according to a guest’s preference on his or her
next visit _ request customer feedback.