Chapter 3

Question 1

Discuss why it is important for a firm to study and understand its internal environment

Answer 1

• companies are using its core competencies to implement an internal strategy
• analysing the the firms entire portfolio of resources and capabilites
• understanding how to deal with the capabilites and resources is a key outcome decision makers seek when analysing the internal organisation (e.g. VW with its strategy 2018

Question 2

Explain what capabilites are. What must a firm do to create capabilites?

Answer 2

Capabilites: Capabilites are used to complete the organisation’s activities required to produce and distribute the service for customers of creating value for the customers

• Capabilites are the foundation of core competencies, Capabilites carry knowledge through the firms human capital
• Capabilites are developed in funstional areas (mnufacturing, R&D, marketing)

-need to support its capabilites
Value chain analysis can help to identify capabilities (value capabilities, rare capabilities, costly-to-Imitate capabilities, non-substitutable capabilities)