Learning Activity 1

Resource Based Theory

In the readings for this week we learned that a strategic resource is an asset that is valuable, rare, difficult to imitate, and nonsubstituble. Southwest Airlines was illustrated as a company that demonstrates these characteristics.

Learning Activity

Apply this concept to the organization that you currently work for or an organization that you have worked for in the past. Discuss your views on the applicability of this theory to the success of the organization that you have chosen and discuss how the organization demonstrates each of these characteristics. 

Learning Activity 2

1. A summary step in conducting an internal strategic-management audit is to construct an IFE Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among these areas.

2. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all-powerful technique.

B. An IFE Matrix is developed in five steps:

1. List key internal factors as identified in the internal-audit process. Use a total of from 10 to 20 internal factors including both strengths and weaknesses.

2. Assign a weight ranging from 0 (not important) to 1.0 (very important) to each factor. The sum of all the weights must equal 1.0.

3. Assign a 1-4 rating to each factor to indicate whether that factor represents a major weakness (1), minor weakness (2), minor strength (3), or major strength (4).

4. Multiply each factor's weight by its rating to determine a weighted score for each variable.

5. Sum the weighted scores for each variable to determine the total weighted score for the organization.

C. Additional IFE Matrix Information

1. The total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position.

2. When a key internal factor is both a strength and weakness, the factor should be listed twice in the IFE Matrix, and a weight and rating should be assigned to each statement.

3. An example of an IFE Matrix is provided in Table 4-9 for a retail computer store.

4. In multidivisional firms, each autonomous division or strategic business unit should construct an IFE Matrix. Divisional matrices can then be integrated to develop an overall corporate IFE Matrix.

Source: David, F. R. (2013). Strategic Management. A Competitive Advantage Approach. New Jersey, NJ: Pearson Education Inc.