Ch4 - Evaluating Internal Environment

Question 1

Learning Objectives

Answer 1

1. What is the Resource-Based View and why is it important to organizations?
2. How is the VRIO tool applied to strategic resources?
3. In what ways can intellectual property serve as a value-added resource for organizations?
4. What are isolating mechanisms and how can they contribute to a firm’s competitive advantage?
5. How can the Value Chain be applied to achieve a competitive advantage?

Question 2

Importance of assessing the internal environment of the organization?

Answer 2

Determining the answer to the question:

Where are we?

• Financially
• Resource-based view - VRIO - Value Chain Analysis - SWOT analysis - examining resources and capabilities of the org. that can be used to create a sustainable competitive advantage

Question 3

VRIO Model

Answer 3

1. Valuable
2. Rare
3. Inimitable
4. Organized to capture value

Question 4

Capabilities

Answer 4

Ability to put resources, and processes to effective use to add value to the customer

Question 5

Tangible and Intangible resources

Answer 5

Tangible - PPE

Intangible - skills/knowledge of employees, trademarks/copyrights/patents, etc.

Question 6

Intellectual property definition

Answer 6

The term intellectual property refers to creations of the mind, such as inventions, artistic products, and symbols. Some forms of intellectual property are protected by law while others can best be defended by surrounding them in secrecy.

Question 7

Patents

Answer 7

protects inventions from direct imitation for a limited period of time (i.e.: new drugs)

Question 8

Trademarks

Answer 8

protect phrases, pictures, names, or symbols that are used to identify a particular organization

Question 9

Copyrights

Answer 9

exclusive rights to the creators of original artistic works such as: books, movies, songs, and screenplays. Can be sold and licensed

Question 10

Trade secrets

Answer 10

formulas, practices, and designs that are central to a business and that are kept a secret from competitors

Question 11

Social complexity

Answer 11

the business/personal relationships that create a barrier to imitation, and can prolong a competitive advantage

Question 12

Path dependence

Answer 12

Decisions that a firm takes over time can grant it some benefits that are not easily imitated, due to their difficulty in acquiring, down the line by competitors.

Question 13

Causal ambiguity

Answer 13

Not knowing exactly what it is that has given a competitor their market advantage (i.e. Netflix)

Question 14

3 Isolating Mechanisms

Answer 14

Ways a firm can prevent competitors from imitating a resource or capability that gives it its competitive advantage.

1. Social complexity
2. Path dependence
3. Casual Ambiguity

Question 15

Value Chain

Answer 15

The activities that make the end product more valuable to the consumer than the raw ingredients/individual parts.

Question 16

Value Chain

2 types of activities

Answer 16

Primary activities

for the creation and distribution of goods/services

Support activities

supplementary activities that aid primary activities

Question 17

4 Support Activities

Answer 17

1. Firm infrastructure - management, legal, finance, and planning
2. HR management - prof. development, recruiting, relations.
3. Technology development
4. Procurement - inventory, and connections with suppliers

Question 18

5 Primary Activities

Answer 18

1. Inbound logistics
2. Operations
3. Outbound logistics
4. Marketing and sales
5. Service