Firm Influences

Question 1

Transaction cost economics (TCE) management looks at 2 kinds of imperfections. Which and what do they entail?

Answer 1

Transaction imperfections: information assymetry, uncertainty, time.
Market imperfections: goods, products, economies of scale

Question 2

What 4 things are transactions characterized by?

Answer 2

1) bounded rationality (lack of complete information)
2) Opportunism (self-interested behavior)
3) Asset specificity (company specific assets)
4) Uncertainty (behavioral and environmental)

Question 3

List examples of asset specificity

Answer 3

Site specific: Immovable, location resources
physical assets: single purpose, specialized machinery
human assets: specialized skills/knowledge
time: When the assets reach the consumer

Question 4

Give examples of physical capital resources

Answer 4

Plants, equipment, geographical location, access to raw material

Question 5

Give examples of human capital resources

Answer 5

Training, experience, judgement, intelligence, personal relationships

Question 6

Give examples of organizational capital resources

Answer 6

reporting structures, planning, controlling and coordinating processes and systems.

Question 7

What are the 5 overall capabilities?

Answer 7

R&D and innovation capabilities (development skills, innovative organizational skills (like fast-cycle products)

Operational cap: process efficiency (e.g. JIT, lean manufacturing, automation), flexibility, improved operations, speed.

Marketing cap: market knowledge and responsiveness, development/adaption to trends, communication with consumer, brand management.

Sales and distribution cap: Sales skills and knowledge, efficiency in distribution.

Corporate management cap: strategy development, implementation, coordination

Question 8

What is a dynamic capability

Answer 8

Dynamic indicates is about the ability to renew competencies and capability refers to ability to perform. Internal and external competencies to adress changing environments.

based on 3 Ps: Process (coordination, learning), position, path

Question 9

Explain the VRIO/S framework

Answer 9

V = value
R = Rarity
I = inimitable
O/S = integration into the org vs substitutability
It is a framework that considers the competitive advantage you gain from a resource.

Question 10

VRIO/S - Valuable NO

Answer 10

If the resource is not valuable, you have a competitive disadvantage

Question 11

VRIO/S - Valuable YES, Rare NO

Answer 11

If the resource is valuable but not rare then you have a competitive parity

Question 12

VRIO/S - Valuable YES, Rare YES, In-imitable NO

Answer 12

If the resource is valuable, rare, but not in-imitable (can be imitated) then you have a temporary competitive advantage

Question 13

VRIO/S - Valuable YES, Rare YES, In-imitable YES, Organized NO

Answer 13

If the resource is valuable, rare, in-imitable (can’t be imitated), but not integrated into the org, you have a unused competitive advantage

Question 14

VRIO/S - Valuable YES, Rare YES, In-imitable YES, Organized YES

Answer 14

then you have a sustainable competitive advantage

Question 15

What is the difference between a competitive advantage and a core competence

Answer 15

It is the core competencies that make up the competitive advantages.