Chapter 4 Flashcards
What are core competencies?
Core competencies refer to the unique strengths embedded deep within a firm. They enable firms to differentiate their products and services in order to acquire competitive advantage
What’s the resource-based view?
The resource-based view is a model that sees certain types of resources as key to superior firm performance, it helps identifying core competencies. Resources fall into two categories: intangible and tangible. Tangible resources are the ones that have physical attributes and thus are visible. Intangible resources are the ones that do not have physical attributes and thus are invisible. As tangible assets can always be bought, we say that intangible assets are more likely to create competitive advantage.
What assumptions does the usefulness of the ressource based view consist of?
- Resource heterogeneity, which is an assumption saying that a firm is a bundle of resources, capabilities, and competencies that differ across firms.
- Resource immobility, which is an assumption saying that a firm has resources that tend to be “sticky” and that do not move easily from firm to firm. The resources differences that exists between firms are difficult to replicate and can therefore last a long time.
Whats the VRIO framework and what does it consist of?
The VRIO framework is a theoretical framework that explains and predicts firm-level competitive advantage. It is implied in the resource-based model, identifying certain types of resources as key to superior firm performance:
Valuable
Rare, and costly to
Imitate.
Organized to capture the value of the resource.
What are isolating mechanisms?
Isolating mechanisms are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
What are the five isolating mechanisms?
(1) Better expectations of future resource value.
(2) Path dependence, which describes a situation in which the options one faces in the current situation are limited by decisions made in the past.
(3) Causal ambiguity, which refers to a situation in which the cause and effect of a phenomenon are not readily apparent.
(4) Social complexity, which describes situations in which different social and business systems interact.
(5) Intellectual Property (IP) protection, which refers to a critical intangible resource that can provide a strong isolating mechanism, and thus help to sustain a competitive advantage.
What are better expectations of future resource value?
When a firm acquire resources at a low cost expecting it to gain value in later years and when competitors don’t have the right expectations. Thus, resulting in a competitive advantage. If this is systematically repeated over time, it can help sustaining a competitive advantage.
What is path dependence?
(2) Path dependence, which describes a situation in which the options one faces in the current situation are limited by decisions made in the past. Once the train of new capability development has left the station, it is hard to jump back on because of this
What is causal ambiguity?
(3) Causal ambiguity, which refers to a situation in which the cause and effect of a phenomenon are not readily apparent. Managers must understand both a hypothesis – a specific statement that proposed an explanation of a phenomenon, and a theory – a more generalized explanation of what causes what, and why
What is social complexity?
(4) Social complexity, which describes situations in which different social and business systems interact. It emerges when two or more systems are combined. The interactions between systems create too many possible permutations for a system to be understood with any accuracy, which makes copying this system much harder, if not impossible.
What is intellectual property protection?
(5) Intellectual Property (IP) protection, which refers to a critical intangible resource that can provide a strong isolating mechanism, and thus help to sustain a competitive advantage. The five major forms are: patents, designs, copyrights, trademarks, and trade secrets.
What are a firms dynamic capailities?
Dynamic capabilities describe a firm’s ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage
Whats the difference between resource stocks & resource flow?
When talking about resources, it is important to note the difference between resource stocks – the firm’s current level of intangible resources (they are built through investments over time), and the resource flow – the firm’s level of investments to maintain or build a resource.
Whats the value chains and what are its 5 steps?
The value chain refers to the internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value but also incremental costs. We can define five stages: supply chain management, operations, distribution, marketing & sales, after-sales service.
What’s the difference between primary and support activities?
Primary activities refer to the activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain. While, support activities refer to the activities that add value indirectly but are necessary to sustain primary activities.
