Chapter 5 - Resources and capabilities analysis

Question 1

Resources

Answer 1

The assets that organisations have or can call upon, ex: Intellectual property. ‘what we have?’

Question 2

Capabilities

Answer 2

are the ways in which those assets are deployed, competences, ‘what we do?’

Question 3

Resource-based view (RBV)

Answer 3

that the competitive advantage and superior performance of an organisation are explained by the distinctiveness of its resources and capabilities

Question 4

Threshold resources and capabilites

Answer 4

are those needed for an organisation to meet the necessary requirements to compete at all in a given market and achieve parity with competitors in that market.

Question 5

Distinctive resources and capabilities

Answer 5

are what gives competitive advantages and superior performance, ‘winners’ required to triumph over competitors.

Are required to achieve competetive advantage.

Question 6

VRIO

Answer 6

Four key criteria by which resources and capabilities can be assesed for achieving competitive:
1. Value
2. Rarity
3. Inimitiability
4. Organinsational support

Question 7

V - Value of resources and capabilities

Answer 7

Resources and capabilities are valuable when they create a product or a service that is of value to customers and enables the organisation to respond to environmental opportunities or threats. Three components to consider:
* Value to customers. Resources and capabilities need to be of value to customers. Having resources and capabilities that are different from other organisations is not, of itself, a basis of competitive advantage.
* Taking advantage of opportunities and neutralising threats. valuable resources and capabilities need to address opportunities and threats that arise in an organisation’s environment. An external opportunity is addressed when a resource or capability increases the value for customers either through lowering the price or by increasing the attractiveness of a product or service.
* Cost. The product or service needs to be provided at a cost that still allows the organisation to make the returns expected of it. The danger is that the cost of developing or acquiring the resources and/or capabilities to deliver what customers especially value is such that products or services are not profitable.

Question 8

R- Rarity

Answer 8

Resources and capabilities that are valuable but common among competitors are unlikely to be a source of competitive advantage. Rare resources and capabilities are those possessed uniquely by one organisation or by a few others. Here competitive advantage is longer-lasting.

Question 9

I- Inimitability

Answer 9

Imitable resources and capabilities – those that competitors find difficult and costly to imitate or obtain or substitute.The barriers to imitation lie deeply in the organisation in linkages between activities, skills and people.

Question 10

Complexity

Answer 10

The barriers to imitation lie deeply in the organisation in linkages between activities, skills and people.
* Internal linkages. Linked activities and processes together deliver customer value. Hard to replicate complexity because the numerous interactions between tightly knit activities and decisions. → Because it has dveloped on customs and practice built up over years (experience) and is specific to the organisation concerned.
* External interconnectedness. By developing activities together with customers or partners so they become dependent on them (hard to replicate).

Question 11

Casual Ambiguity

Answer 11

Resources and capabilities are difficult and costly to imitate → difficult to seperate the causes and effects underpinning an organisation’s advantage. Two different forms:
* Characteristic ambiguity. It is rooted in the organisation’s culture or based on tacit knowledge.
* Linkage ambiguity. Where competitors cannot discern which activities and processes are dependent on which others to form linkages that create distinctiveness.

Question 12

Culture and history

Answer 12

Resources and capabilities that involve complex social interactions and interpersonal relations within an organisation are difficult and costly for competitors to imitate.

Question 13

O - Organisational support

Answer 13

The organisation must also be suitably organised to support these capabilities, including appropriate organisational processes and systems. To fully take advantage of the resources and capabilities, an organisation’s structure and formal and informal management control systems need to support and facilitate their exploitation.

Question 14

VRIO analysis

Answer 14

A VRIO analysis helps to evaluate if, how and to what extent an organisation or company has resources and capabilities that are (i) valuable, (ii) rare, (iii) inimitable and (iv) supported by the organisation.

Question 15

Value chain

Answer 15

describes the categories of activities within an organisation which, together, create a product or service.

Question 16

Benchmarking

Answer 16

Used to understand how an organisation compares with others.
* Industry/sector benchmarking. Comparing performance against other organisations in the same industry sector or between similar service providers against a set of performance indicators.
* Simply achieving competitive parity. The best performance that can be expected out of this exercise is to achieve a threshold level and competitive parity. For organisations with competitive disadvantage, this can be highly rewarding but, to achieve competitive advantage, an organisation needs to move further and develop its own distinctive resources and capabilities.

Question 17

Dynamic Capabilities

Answer 17

Dynamic capabilities, an organisation’s ability to renew and recreate its resources and capabilities to meet the needs of changing environments.