#5 RBV and core competencies Flashcards
What is a resource
Anny asset controlled by the firm that enables it to “conceive and implement strategies that increase its effectiveness and efficiency”.
What are the types of resources?
- Physical capital resources
- Human capital resources
- Organizational capital resources
What is competitive advantage and sustained competitive advantage?
Competitive advantage: When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors.
Sustained competitive advantage: competitive advantage that cannot be imitated. It is not a matter of time, but a matter of unsuccessful attempts of imitation that makes it sustained. It’s an equilibrium state.
Explain Schumpetarian Schock and contextualize it to competitive advantage:
An unexpected change in economic structure. A change to a new equilibrium.
A sustained competitive advantage does not last forever, but until the occurrence of a “Schumpeterian Schock”:
What are the characteristics of a resource than can lead to competitive or sustained competitive advantage?
VRIN
- Valuable (exploit opportunity or neutralize threat)
- Rare (controlled by only a few other firms)
- Imperfectly Imitable
- Non-substitutable (if another resource could do the job, it would not be sustained)
Explain dynamic capabilities:
“Require continual redeployment of resources that reflect the changing conditions of the market (e.g. rapid technological changes)
Competence depends on the speed or intensity with which a firm is able to profit from changes in the market.”
Explain PPP and contextualize to competitive advantage:
Competitive advantage lies within:
Processes = “The way things are done” at the organization. Managerial, organizational routines
Positions = Current, specific assets. Technology, IP, customer base
Paths = Strategic alternatives available to the firm
Why is it hard to be dynamic?
Because of path dependency - there is a legacy. Current position affects paths
Explain replication and imitation
Both involve transferring or redeploying competences from one setting to another.
- Replication: internal
- Imitation: Between competitors
What is a core competency?
A competency leads to competitive advantage and:
- Is hard to imitate
- Can be deployed in many markets or products, now or in the future
- Provides significant consumer benefits
Explain Core competencies, core products and end products
Core competencies - class of product functionality
Core products - embodiment of core competencies
End products - extensions of core products
What are ways of building core competencies?
- Smart R&D
o Not spendthrift, e.g. Xerox in 70’s, Apple in 90’s - Alliances
- Identification of next-generation competencies
- Dedicate time
Explain “dynamic” in “dynamic capabilities”
“Dynamic” refers to the capacity to renew competences so as to achieve congruence with the changing business environment.
Explain “capabilities” in “dynamic capabilities”
“capabilities” ability of management in adapting.
Difference between VRIN Resource, dynamic capabilities and core comptencies.
Dynamic capabilities also include strategic alternatives available to the firm
Dynamic capabilities are needed to respond to technological changes while resources that can lead to SCA can be destroyed by such changes. Since core competencies can be embodied in several core products and end products across market and time, it explores the different strategic alternatives available to the firm in greater detail.
