Chapter 3 Notes Flashcards
resource based view (RBV)
model of a firm performance that focuses on the resources and capabilities controlled by a firm as sources of competitive advantage
resources
tangible and intangible assets that a firm controls that it can use to conceive and implement its strategies
capabilities
subset of a firm’s resources and are defined as the tangible and intangible assets that enable a firm to take full advantage of the other resources it controls
financial resources
money, whatever source that firms use to implement strategies
retained earnings
profit that a firm made earlier in its history and invests in itself, are also an important type of financial resource
physical resource
include all the physical technology used in a firm
human resources
include the training, experience, judgment, intelligence, relationships, and insight of individual mangers and workers
organization resources
an attribute of groups of individuals
resource heterogeneity
implies that for a given business activity, some firms may be more skilled in accomplishing this activity than others
resource immobility
where it is very costly for firms to gain resources
VRIO
can explain the return potential of a firm Value Rarity Imitability Organization
Question of Value
do resources and capabilities enable a firm to exploit an external opportunity or neutralize an external threat?
Question of Rarity
is a resource currently controlled by only a small number of competing firms
question of imtability
do firms without a resource face a cost disadvantage in obtaining or developing it
question of organization
are a firm’s other policies and procedures organized to support the exploitation of its valuable, rare, and costly to imitate resources
value chain
set of business activities in which it engages to develop, produce, and market its products or services
question of rarity
how many competing firms already possess particular valuable resources and capabilities
imperfectly imitable
firms have resources that are difficult for other firms to get
question of imitability
Do firms without a resource or capability face a cost disadvantage in obtaining or developing it compared to firms that already possess it
sustained competitive advantage
an advantage that is not competed away through strategic imitation
direct duplication
copying exactly a resource or product
substitution
making something that will substitute for a product
sources of costly imitation
unique historical condition
causal ambiguity
social complexity
patents
path dependence
a process is said to be path dependent when events early in its evolution have significant effects on subsequent events
causally ambiguous
when firms don’t understand the relationship between the resources and capabilities controlled by a firm
socially complex
resources and capabilities that involve interpersonal, social, or cultural links among individuals.
question of organization
Is a firm organized to exploit the full competitive potential of its resources and capabilities?
formal reporting structure
description of whom in the organization reports to whom
organizational chart
formal reporting structure is written in this
management control systems
include a range of formal and informal mechanics to ensure that managers are behaving in ways consistent with a firm’s strategies.
formal management controls
include a firm’s budgeting and reporting activities that keep people higher up in a firm’s org chart informed about the actions taken by people lower down in the org chart
informal management controls
include a firm’s culture and willingness of employees to monitor each others’ behavior
compensation policies
the ways that firms pay their employees
complementary resources and capabilities
resources and capabilities that have limited ability to generate competitive advantage in isolation but in combination with other resources can enable a firm to realize its full potential for competitive advantage
distinctive competence
a valuable and rare resource or capability
sustainable distinctive competencies
valuable, rare, and costly to imitate resources and capabilities
competitive dynamics
decisions made by other firms given the strategic choices of a particular firm define this
tacit cooperation
any action a firm takes that have the effect of reducing the level of rivalry in an industry and that also do not require firms in an industry to directly communicate or negotiate with each other
tacit collusion
when tacit cooperation has the effect of reducing supply and increasing prices, it is known as this
tactics
specific actions a firm takes to implement its strategies
