Chapter 3 - The internal environment: Resources, Capabilities, and Activities Flashcards
Strategic Leadership uses
Resources & Capabilities to create strategy which gives either a competitive advantage/disadvantage which equals performance
Resources
Inputs used by companies to create products and services
Capabilites
A companies skill’s at using the resources to create goods and services: combination of procedures and expertise on which a company relies to produce goods and services
Value Chain
Total of primary and support activities through which the company adds value
Outsourcing
Activity performed for a company by people other than its full-time employees
Distinctive Competence
Capabilities that sets a company apart from other companies; something that a company can do that the competitors cannot duplicate easily.
Core Competence
Capability that is central to a corporation’s main business operations and allows it to generate new products and services
VRINE
Value, Rarity, Inimitability. Non- Substitutable, Exploitable
Value
Dose the resource or capability allow the organization to meet market demand or protect the organization form market uncertainty??
If Yes,
Competitive - Org is able to compete in an industry, but values itself does not convey an advantage
Performance - Valuable resources and capabilities have the potential to contribute to normal profits (profits to cover the cost of all inputs, including capital)
No - Resources or Capability is not VRINE Certifiable
Rare
Is the resource or capability scarce relative to demand?
If Yes,
Competitive - Valuable resources that are also rare contribute to a competitive advantage, but that advantage may only be temporary
Performance - A temporary competitive advantage can contributes to above normal profits, at least until the advantage is nullified by other firms
Inimitable/non-substitute
Is it difficult for competitors to imitate the resource or capability or substitute other resources and capabilities that yield similar benefits?
If yes,
Performance - A sustained competitive advantage can contribute to above normal profits for extended periods of time (until competitors find ways to imitate or environmental changes nullify the advantage)
Competitive - Valuable and rare resources and capabilities that are also difficult to imitate or substitute can contribute to sustained competitive advantage
Exploitable
Can the organization exploit the resources or capabilities?
If Yes,
Competitive - Resources and capabilities that cannot be exploited do not convey competitive advantage. In fact, they may increase opportunity costs.
Performance - Firms that control and exploit their valuable rare, imitable, and non substituable resources and capabilities generally experience greater levels of financial performance and increased market valuations relative to what they would suffer if they couldn’t exploit them (although they won’t be in as bad shape as competitors who don’t control any virne certified resources and capabilities)
