S6: Capabilities & Value Chain Analysis

Question 1

What are resources?

Answer 1

Tangible/Intangible assets a firm uses to choose and implement its strategies (They are acquired by a firm)

Question 2

What are capabilities?

Answer 2

Resources firms use to organize and exploit other resources (They are developed by a firm, can be skills)

Question 3

What are the different types of tangible resources? (4)

Answer 3

• Financial
• Organizational (ex: formal reporting structures)
• Physical (equipment, buildings, etc.)
• Technological

Question 4

What are the different types of intangible resources? (3)

Answer 4

• Human
• Innovation (ideas, scientific capabilities, etc.)
• Reputational (brand name, customers’ perception, etc.)

Question 5

What is the VRIO analysis?

Answer 5

Is a resource or a capability:
Valuable? no -> competitive disadvantage
Rare? -> competitive parity
Costly to Imitate? no -> temporary competitive advantage
Organized? no -> temporary competitive advantage

Question 6

How to determine if a resource is a competitive advantage?

Answer 6

• Allows the firm to perform an activity better than a competitor
• Creates value that a competitor cannot complete
• Each activity should be examined relative to a competitor’s abilities and rated as superior, equivalent or inferior

Question 7

Benefits of outsourcing? (3)

Answer 7

• Increases a firm’s flexibility
• Mitigate risks
• Reduce their capital investment