Core Capabilities & Core Rigidities, Leonard Barton (1992) (Article)

Question 1

Capabilities are considered core if…

Answer 1

they differentiate a company strategically

Question 2

What is an alternative name for core capabilities

Answer 2

Distinctive competencies

Question 3

Institutionalised capabilities may lead to what in the face of environmental changes

Answer 3

Incumbent inertia

Question 4

Technological discontinuities can

Answer 4

Enhance or destroy existing competencies within an industry

Question 5

All innovation necessarily requires:

Answer 5

Some degree of ‘creative destruction’ (Schumpeter, 1942)

Question 6

What is the paradox?

Answer 6

Core capabilities simultaneously enhance and inhibit development

Question 7

Development projects reveal…

Answer 7

Friction between technology strategy and current corporate practices + spearhead potential new strategic directions

Question 8

In a knowledge based view of a firm, what are the 4 dimensions to a knowledge set?

Answer 8

1) Knowledge and skills
2) Technical systems
3) Managerial systems
4) Values and norms

Question 9

What does VRIN stand for?

Answer 9

Value
Rarity
Imitatability
Non-substitutability

Question 10

Strategic capabilities are of value when they:

Answer 10

take advantage of opportunities and neutralise threats,

provide value to customers

provide potential competitive advantage

at a cost that allows an organisation to realise acceptable levels of return

Question 11

Rarity

Answer 11

Rare capabilities = possessed uniquely by one organisation or by a few others only.
e.g. a company may have patented products, have supremely talented people or a powerful brand.

Rarity can be temporary.
Eg: Patents expire, key individuals can leave or brands can be de-valued by adverse publicity
“Think of the success of Sir Alex Ferguson?”

Question 12

Inimitability

Answer 12

Those that competitors find difficult to imitate (copy) or obtain

Competitive advantage can be built on unique resources (e.g. a key individual or IT system) but these may not be sustainable.

Question 13

Non-substitutability


Answer 13

Threat of substitution.

Product or service substitution from a different industry/market.
For example, postal services partly substituted by e-mail.
CDs and MP3s

R&C substitution, e.g. a skill substituted by expert systems or IT solutions.

Question 14

Benchmarking

Answer 14

Means of understanding how an organisation compares with others.

Question 15

What are the 2 main approaches to benchmarking?

Answer 15

Industry/sector benchmarking

Best-in-class benchmarking

Question 16

Name tools that can be used:

Answer 16

financial ratios (CORE);
systems analysis;
value chain analysis

Question 17

Who coined Value chain analysis?

Answer 17

(Porter, 1985)

Question 18

What is value chain analysis?

Answer 18

A tool that maps the sequence of events that lead to the company’s competitive advantage

Question 19

What does VCA do?

Answer 19

Helps determine strengths & weaknesses

Focuses on how activities add (lose) value

Question 20

What are 2 different approaches to VCA?

Answer 20

Cost advantage

Differentiation advantage

Question 21

Cost advantage

Answer 21

Used when organizations try to compete on costs and want to understand the sources of their cost advantage or disadvantage and what factors drive those costs.

Question 22

Differentiation advantage

Answer 22

Firms that strive to create superior products or services use differentiation advantage approach

Question 23

The Value Chain analysis prompts 4 fundamental questions worth asking:

Answer 23

1) Do the support activities truly add value?
2) Should we buy or make?
3) What linkages in the chain truly provide more than competitors ?
4) How can the chain be reconfigured to either lower costs or increase customer benefits ?