IIV. Issue for Debate
This is an issue that is about brand value and how overextending a brand can erode its
value. The World Triathlon Organization (which holds the Ironman competitions) extended its
QUESTIONS:
1. What actions should WTC take?
Here, you should get some interesting debate among your students. Clearly, there will be some
that think that WTC should make every effort to maximize revenues with events and products
that don’t represent the “spirit” of the brand; others will be more cautious and concerned about
2. Is the World Triathlon Organization trying too aggressively to monetize the brand?
Students may have a variety of perspectives on this issue—often reflecting how important they
Ask the students: Who are the stakeholders of World Triathlon Organization? Are there
stakeholders other than the stockholders that should be taken into consideration? Just like other
3. What are the long-term implications of their efforts?
In the process of identifying new markets to enter, the company did not seek input from other
stakeholders. To the company’s dismay, expanding the brand to strollers and other non-related
V. Reflecting on Career Implications
Below, we provide some suggestions on how you can lead the discussion on the career
implications for the material in Chapter 3.
The Value Chain: It is important that you develop an understanding of your firm’s value
chain. What activities are most critical for attaining competitive advantage? Think of
ways in which you can add value in your firm’s value chain. How might your firm’s
support activities (e.g., information technology, human resource practices) help you
accomplish your assigned tasks more effectively? How will you bring your value-added
contribution to the attention of your superiors?
Students should appreciate that the value chain helps to identify where within the firm that
competitive advantage is created. To make this concept more concrete, instructors may need to
us a real-world example. Consider a firm such as Whole Foods. Ask students which activity may
be most responsible for its competitive advantage. There are multiple possible “right” answers,
As for bringing the value-added contribution to the attention of superiors, the best technique
depends on the environment within firms and the student’s relationship with the superior. Ask
The Value Chain: Consider the most important linkages between the activities you
perform in your organization with other activities both within your firm, as well as
The goal of this discussion is to get students to appreciate the wider context of their current
position. Ask students who have jobs, or a select few “volunteers,” to consider this context by
identifying the value-chain activity in which they currently work, its internal linkages with other
Resource-Based View of the Firm: Are your skills and talents rare, valuable, difficult to
imitate, and do they have few substitutes? If so, you are in the better position to add value
for your firm—and earn rewards and incentives. How can your skills and talents be
enhanced to help satisfy these criteria to a greater extent? More training? Change
positions within the firm? Consider career options at other organizations?
The RBV can apply to individuals as well as firms, which is analogous to SWOT analysis. Ask
students to identify their individual skills and capabilities that differentiate them from other
employees and give them a sustainable “competitive advantage” over others. Then ask students
Balanced Scorecard: Can you design a “balanced scorecard” for your life? What would
be the perspectives that you will include in it? In what ways would such a “balanced
scorecard” help you attain success in life?
A useful way to start this discussion is to ask students to devise measures for their personal
professional success. Money can be only one measure, and students will have to think beyond
this dimension. A brainstorming approach is appropriate, and the range of suggestions may
VI. Summary
In traditional approaches to assessing a firm’s internal environment, a manager’s primary
goal would be to determine her firm’s relative strengths and weaknesses. Such is the role of
SWOT analysis, wherein a manager analyzes her firm’s Strengths and Weaknesses as well as the
We identified two frameworks that serve to complement SWOT analysis in assessing a
firm’s internal environment: value-chain analysis, and the resource-based view of the firm. In
conducting a value-chain analysis, you first divide the firm into a set of value-creating activities.
The resource-based view of the firm considers the firm as a bundle of resources: tangible
resources, intangible resources, and organizational capabilities. Competitive advantages that are
sustainable over time generally arise from the creation of bundles of resources and capabilities.
An internal analysis of the firm would not be complete unless you evaluated its
performance and made the appropriate comparisons. Determining a firm’s performance requires
an analysis of its financial situation as well as a review of how well it is satisfying a broad range
In an appendix to this chapter, we discuss how Internet-based businesses and incumbent
Chapter 3: Assessing the Internal Environment of the Firm
Map the value chain for an organization with which you are familiar. Assess each of
the activities in the value chain as to whether they are a strength or a weakness. What are the
important relationships among the activities?
Teaching suggestions:
You might want to ask the following questions in order to organize the discussion on this topic.
*What is ‘Value?’ Why is this mapping called ‘value chain?’
Value, in competitive terms, means the amount the buyers are willing to pay for a firm’s
The mapping is called a ‘value chain’ because, in this analysis, the organization is viewed
*What are the primary and support activities?
Primary activities:
Inbound logistics: Activities associated with receiving, storing and distributing inputs to
Operations: Activities connected with transforming inputs into outputs. These are
Outbound logistics: Activities associated with collecting, storing and distributing the
Marketing and sales: Activities associated with purchases of products and services by the
Service: Includes all activities associated with providing service to enhance or maintain
Support activities:
Procurement: It is the function of purchasing inputs used in the firm’s value chain.
Technology development: Refers to a number of technologies from those used to prepare
Human resource management: Consists of activities involved in the recruitment, hiring,
training, development and compensation of all types of personnel. It supports both
General administration: General management, planning, finance, accounting, legal,
You might want to ask the students to describe the primary activities of the organization they
*Are the components of the value chain independent of each other? What are the
interrelationships?
The components of value chain are described and understood separately for the purpose
of clarity. Clearly, there are interrelationships among the various activities. For example,
You can ask the students to map the interrelationships among the various value-chain activities.
A template for such mapping is provided in the experiential exercise section of this chapter.
It is also important to recognize that one has to look at the “value chain” in the broader
context of the firm’s relationships with its suppliers and customers i.e., the extended
The example of Campbell Soup given in the text illustrates such beneficial relationships
with the customers, i.e., the retailers in this case. Campbell Soup uses an electronic
network that facilitates its “continuous-replenishment” program with its most progressive
*How does “value-chain analysis” help?
The purpose of the analysis is to understand which activities help in creating value for the
customer and therefore, can be sources of sustainable competitive advantage. Activities
It would be useful to bring in the “resource-based view” of the firm into discussion.
According to the resource-based view, there are additional qualifications for a resource
You might also want to ask the students to now assess each of the value-chain activities and their
combinations on these four attributes to determine whether the activity or the combination can be