Internal Analysis Flashcards
What is the level of internal analysis?
A single firm within an industry
What is a resource?
A productive input or competitive asset that is owned or controlled by a company
What are the two types of resources?
Tangible: visible, physical attributes (labour, capital, land, equipment, supplies)
Intangible: invisible, no physical attributes (culture, knowledge, reputation)
What is a capability?
The capacity of a firm to perform some activity proficiently using resources, emerges over time through complex interactions, and is often knowledge based
What is a competence?
type of capability that allows a company to expand scope of business
What is a core competence?
unique, deeply embedded, firm-specific strengths that allow companies to differentiate products or offer lower price and create more value
What is an activity
distinct and fine-grained business processes that enable firms to add incremental value by transforming input into goods and services
What is the resource base view of the firm?
a framework which is used to determine the resources which are key to firm’s superior performance
Explain each aspect of VRIO
Value: enable the firm to create value by negating threats or leveraging opportunities
Rarity: how many competing firms already possess specific values and capabilities
Inimitability: difficult to imitate
Organized: Organized to capture value
What are the 2 assumptions which are critical in explaining superior firm performance in RBV?
Resource Heterogeneity: firm is a bundle of resources, capabilities, and competencies that differ across firms
Resource Immobility: firm has resources that tend to be ‘sticky’ and do not move easily firm to firm
What are the barriers to imitation?
Better Expectations of Future Values: Buying resources at a low cost, first mover advantage
Path Dependence: current alternatives are limited by past decisions, decisions evolve over a long period of time
Causal Ambiguity: causes of success or failure is not apparent, inputs and outputs are observable but not the process, multiple paths to the same outcome
Social Complexity: two or more systems interact creating many possibilities, tacit knowledge (process, routines, interactions) are less apparent to competitors
When are resources strategically valuable?
- Hard to copy
- Depreciates slowly
- Your company controls its value
- It cannot be easily substituted
- Better than competitors’ similar resources
What is the value chain analysis on a firm level?
Internal activities a firm engages in when transforming inputs into outputs
What are primary and support activities?
primary: firm activities that add value directly by transforming inputs into outputs as firms move a product/service horizontally along internal value chain
support: firm activities that add value indirectly but necessary to sustain primary activities
Examples of primary activities
supply chain management, operations, distribution, market and sales, after sales service
