Module 1: Selection and synergy

Question 1

Resource-based View

Answer 1

CA = VRIN resources.
- Valuable
- Rare
- Inimitable
- Non-substitutable

VR –> rent generating potential at a point in time.
IN –> rent generating potential over time.

Question 2

Dynamic capability approach

Answer 2

CA = ability to adapt resources to changing environment.
–> Integrate, reconfigure, gain and release them.

Question 3

Dynamic capabilities at corporate level (4)

Answer 3

1. Reconfiguration
2. Leveraging
3. Learning
4. Integration

Question 4

Reconfiguration explanation + example

Answer 4

Support activities –> consolidation.
Core activities –> economies of scale.

Example: Renault producing engines in one BU that are put in various vehicles.

Question 5

Leveraging explanation + example

Answer 5

Extending scope of resources into other BUs.

Example: Renault using technology to make cars more efficient in different BUs (trucks, cars, F1).

Question 6

Learning explanation + example

Answer 6

Encouraged learning –> providing resources.
Provoked learning –> providing goals.

Example: Renault establishing a culture where BUs are encouraged and supported to drive innovation.

Question 7

Integration explanation + example

Answer 7

Encouraging cross-BU collaboration.

Example: Renault pooling aerodynamics knowledge of trucks BU, engine knowledge of F1 BU, and in-car computer knowledge of car BU.

Question 8

Two types of synergies

Answer 8

• Cost-reducing synergies: sub additive –> 2+2=3
• Revenue-enhancing synergies: super additive –> 2+2=5

Question 9

Consolidation explanation + example

Answer 9

Eliminating redundancies across similar resources.

Example: reduction in head count by merging departments.

Question 10

Combination explanation + example

Answer 10

Pooling similar resources.

Example: volume discounts or increases political influence from being larger.

Question 11

Customisation explanation + example

Answer 11

Co-specialising dissimilar resources to create greater joint value.

Example: software company and phone company develop handset hardware and operating software that are customised to each other.

Question 12

Connection explanation + example

Answer 12

Pooling the outputs of dissimilar value chain activities, with little modification.

Example: provide one-stop-shop to reduce search and transaction costs, cross-selling of products to each other’s customers, using a common brand.