Session 4

Question 1

What does Barney’s theory focus on?

Answer 1

Strategy, resources, and capabilities

Question 2

What is SWOT? (not Barney’s theory)

Answer 2

It is the traditional tool for strategic analysis

Question 3

What does SWOT stand for?

Answer 3

Strength, Weaknesses, Opportunities, Threats

Question 4

What are the two components of SWOT?

Answer 4

Internal and External Environment analysis

Question 5

What is the Internal Environment?

Answer 5

Internal resources and capabilities of the firm

Question 6

What parts of SWOT are part of the Internal Environment?

Answer 6

Strengths and Weaknesses

Question 7

What is the External Environment?

Answer 7

Business and societal trends, industry conditions and competitive environment

Question 8

What parts of SWOT are part of the External Environment?

Answer 8

Opportunities and Threats

Question 9

What does Barney’s theory look into?

Answer 9

The competitive advantage

Question 10

What does Barney’s theory provide to organizations?

Answer 10

It provides a tool to assess the organization’s internal resources and capabilties

Question 11

What are Barney’s major claims?

Answer 11

The most careful and complete analysis of firms’ external (competitive) environments cannot, by itself, explain their success
Strategists also need to analyze the competitive implications of firms’ internal strengths and weaknesses
A firm will be successful if it has resources with the right attributes and characteristics
A firm will have a sustained competitive advantage if its resources and capabilities are valuable, rare, inimitable and organized in a way that allows it to exploit potential opportunities

Question 12

What are the Firm’s Resources and Capabilties?

Answer 12

Financial (Debt, equity, retained earnings, etc.), Physical (Machines, manufacturing facilities, buildings), Human (Experience, knowledge, judgment, wisdom, etc.), and Organizational (History, relationships, trust, culture, formal reporting structure, patents, etc.)

Question 13

What are the Resources and Capabilities of the firm used for?

Answer 13

They are used to develop, manufacture and deliver products and services to its customers

Question 14

What are the 4 important questions about Resources and Capabilities?

Answer 14

The Question of Value (Does a firm’s resources and capabilities enable it to exploit an opportunity, and/or neutralize a threat?)
The Question of Rareness (How many competing firms already possess these valuables resources and capabilities?)
The Question of Imitability (Do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it?)
The Question of Organization (Is a firm organized to exploit the full competitive potential of its resources and capabilities?)

Question 15

What is the importance of history?

Answer 15

Valuable and rare resources acquired or developed through unique historical circumstances can be a source of sustained competitive advantage

Question 16

What is the importance of numerous small decisions?

Answer 16

A firm’s competitive advantage seems to be dependent on numerous “small decisions” (rather than big ones) through which a firm’s resources and capabilities are developed and exploited.

Question 17

What is the importance of socially complex resources?

Answer 17

Reputation, trust, friendship teamwork and complex culture, while not patentable, are difficult to imitate.

Question 18

What is the formal reporting structure?

Answer 18

Signing in, having meetings, handing in progression reports. It is a way of reporting that has formal rules and standards

Question 19

What is the explicit management control system?

Answer 19

It is the ways in which companies manage and organize formal reporting structures in order to answer the question of organization

Question 20

What are compensation policies?

Answer 20

They are policies that companies use to compensate their employees, their workers, etc.

Question 21

If the firm’s resources are not valuable then the firm can expect:

Answer 21

Competitive disadvantage

Question 22

If the firm’s resources are valuable, but not rare then the firm can expect:

Answer 22

Competitive Parity (equality)

Question 23

If the firm’s resources are valuable and rare then the firm can expect:

Answer 23

Competitive advantage (at least temporarily)

Question 24

What is competitive parity?

Answer 24

Everyone has the same advantages when they have these resources

Question 25

If the firm’s resources are valuable, rare, but not costly to imitate then the firm can expect:

Answer 25

Temporary competitive advantage

Question 26

If the firm’s resources are valuable, rare, and costly to imitate then the firm can expect:

Answer 26

Sustained competitive advantage (if organized properly)