Chapter 4: Internal Analysis Flashcards
resources + capabilities = ____ __________
firms should consciously work to identify these.
core competencies
core competencies
unique strengths embedded deep in a firm allowing it to differentiate from rivals
core competencies are critical to gaining a ______ _______ ________
sustainable competitive advantage
core competencies are expressed through (3)
structures
processes
routines
resources
any assets a firm can draw on
ex. cash, buildings
capabilities
organizational and managerial skills
ex. routine, culture
activities
distinct, fine-grained business processes
core competencies that are not _____ _______ will eventually lose their ability to yield competitive advantage
continuously nourished
resource-based view
model that aids in identifying core competencies, specifically resources as they’re the key to firm performance
categories of resources (2)
tangible
intangible
2 critical assumptions of Resource-Based View
resource heterogeneity
resource immobility
resource heterogeneity
a firm is a unique bundle of resources, capabilities, and competencies; these bundles differ across firms
resource immobility
resources are “sticky” and don’t move easily from firm to firm;
they are difficulty to replicate and can last a long time
VRIO framework
tool for evaluating firm resource environments
to be the basis of competitive advantage, a resource must be (4)
valuable
rare
costly to imitate
organized to capture the value of the resource
a resource should be valuable, meaning…
it helps exploit an opportunity or offset a threat
a resource should be rare, meaning…
one or few firms possesses it
a resource should be costly to imitate, meaning…
there should be high barriers
a resource should be organized to capture its value, meaning…
there should be effective internal organizational structure and systems
isolating mechanisms
barriers to imitation; protects resources that underlie a firm’s competitive advantage
path dependence
where we are today is a result of what has happened in the past
time compression diseconomies
additional costs incurred by seeking to quickly gain resources that should be accumulated over a long period of time
causal ambiguity
situation where cause and effect are not readily apparent; “why exactly is it working so well?”
complexity/interconnectedness
multiple elements interacting with one another making imitation difficult
IP protection
company granted right protecting intellectual property, preventing others from use (trademarks, patents, copyrights)
dynamic capabilities
ability to adapt over time; create, deploy, upgrade, etc
the Dynamic Capabilities Perspective Model emphasizes a firms ability to… (3)
- modify and leverage resource base
- gain and sustain competitive advantage
- respond to a constantly changing environment
value chain analysis
shows the sequence of activities in a firm and how each activity adds incremental value
primary activities
directly adding value; transforming input to output
(ex. operations, distribution, marketing/sales)
support activities
add value indirectly; necessary to sustaining primary activities
(ex. R&D, procurement, HR)
SWOT Analysis aims to
leverage Strengths
mitigate Weaknesses
exploit Opportunities
and reduce Threats
VRIO stands for…
is the resource/capability…
Valuable –>
Rare –>
(costly to) Imitate –>
Organized?
