Internal Analysis

Question 1

What are resources and capabilities and what are their roles in strategy?

Answer 1

1. Resources: what you have
   - undifferentiated or firm-specific
   - tangible or intangible (eg. Innovation)
   - easy to acquire or difficult
2. Capabilities: skills in turning resources into goods/services
   - formal (eg. Practices) or informal (eg. Just good at it)

Question 2

What are core competencies?

Answer 2

Capabilities that serve as a source of sustained competitive advantage over rivals

Question 3

What are the 4 criterion of sustainable competitive advantage?

Answer 3

1. Valuable
2. Rare
3. Costly to imitate
4. Nonsubstitutable

Question 4

What are the elements of the VRINE model and explain them.

Answer 4

This model assesses resources and capabilities and whether they contribute to competitive advantage?

1. Valuable: does it allow firm to meet market demand or protect from market uncertainty
2. Rare: is it scarce relative to demand? Is it not widely possessed by competitors? (Likely only temporary advantage)
3. Imitatable
4. Non-substitutable: something can’t be used to gain similar benefit (potential for sustained CA)
5. Exploitable: can firm actually use it to exploit potential? (If not, huge opportunity cost)

Question 5

What are the 4 support activities in the value chain? (For Help… Tell People)

Answer 5

1. Firm infrastructure
2. HR management
3. Technological development
4. Procurement

Question 6

What are the 5 primary activities in the value chain? (So Many Ouchies and Oozing Indecencies)

Answer 6

1. Service
2. Marketing and sales
3. Outbound logistics
4. Operations
5. Inbound logistics

Question 7

What are the 3 objectives of outsourcing?

Answer 7

1. Improve business focus
2. Provide access to world class capabilities
3. Share risks

Question 8

What are the 4 cautions with outsourcing?

Answer 8

1. Greatest value - only outsource to someone who has a core competency in that activity
2. Evaluate resources and capabilities - don’t outsource unless firm really can’t create and capture value
3. Environmental threats and ongoing tasks - don’t outsource an activity that is used to neutralize environmental threats
4. Firms knowledge base - don’t outsource if activity stimulates the development of new capabilities and competencies

Question 9

What are core rigidities?

Answer 9

Former core competencies that now generate inertia and stifle innovation

Question 10

What is a dynamic capability?

Answer 10

A firm’s ability to modify and revise resources and capabilities in order to fit with the changing environment

Question 11

Define competitive advantage

Answer 11

A firm’s ability to outperform its competitors