Chapter 1

Question 1

What does the resource based model suggest to do a firm to earn above-average returns?

Answer 1

• uniqueness of resources is ability to earn above-average return
  Capability needs to be managed dynamically (Capability = Capacity for a set of resources to perfom)
• identify resources
• competitive advantage
• locate an attractive industry
• strategy formulation to earn above-average returns
• Use competitive advantage in an attractive industry
  • Need to combine both I/O Model
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Question 2

What are Stakeholders? How does the three primary groups influence the organisation?

Answer 2

• Stakeholders: groups or individulas who has an impact on the organisation (customers, suppliers…) they affect the mission and the vision

Capital Market Stakeholders:
• Some investors who have share’s of a firm may get in conflict with the managers some want an increase in return in short term and others want to focus on long-term competitiveness
• Shareholders who hold a large share of stock have a great impact on the capital structure of the firm

Product market stakeholders:
• These stakeholders (customers, suppliers, host communities) can influence the price of the products
• A firm can’t survive without product market stakeholder firm needs to understand their needs

Organisational stakeholders:

• employees want a dynamic wok environment
• want to develop skills
• the more employees have knowledge the more critical are they and it is more dangerous for a company
• international assignments are very important for gaining competitiveness in a global market expatriates)

The natural world
- environmentally friendly