Session 7: The Internal Organization

Question 1

How do we measure value

Answer 1

Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay

Question 2

What is the challenge concerning the competitive advantage?

Answer 2

-competitors will eventually learn how to duplicate the benefits of any firm’s value-creating strategy

-thus, all competitive advantages have a limited life

Question 3

What are the 3 factors of a competitive advantage’s sustainability

Answer 3

1-the rate of core competence obsolescence because of environmental changes

2-the availability of substitute for the core competence

3-the imitability of the core competence

Question 4

What is involve in making a decisions regarding the firm’s assets and why is it difficult

Answer 4

-it involves identifying, developing, deploying, and protecting resources, capabilities, and core competencies

-it is challenging and difficult because it is under the conditions of uncertainty, complexity, and intra organizational conflict (need for judgement)

Question 5

What is a resources

Answer 5

-resources are inputs to a firm’s production

-resources are bundled to create organizational capabilities

-by themselves, resources do not allow firms to earn above-average returns

Question 6

What is a capabilities

Answer 6

-Capabilities are the source of a firm’s core competencies, which are the basis of establishing competitive advantage

-capabilities are:

-created by combining individual tangible and intangible resources

-the foundation for building core competencies and hopefully competitive advantages

-often based on developing, carrying, and exchanging information and knowledge through the firm’s human capital 

-often developed in specific functional areas or in part of a functional area

Question 7

What is a tangible resources

Answer 7

-Tangible resources are assets that can be observed and quantified

-tangible resources are hard to leverage. That is, it is difficult to derive additional business or value from a tangible resource

Question 8

What are the different type of tangible resources

Answer 8

-financial resources
-organizational resources
-physical resources
-technological resources

Question 9

Define the financial resources which is part of the tangible resources

Answer 9

-the firm’s capacity to borrow

-The firm’s ability to generate funds through internal operations

Question 10

What is the organizational resources

Answer 10

-formal reporting structures

Question 11

What is the physical resources of the tangible resources

Answer 11

-the sophistication of a firm’s plant and equipment and the attractiveness of its location

-distribution facilities

-product inventory

Question 12

What is the technological resources of the tangible resources

Answer 12

-availability of technology-related resources such as copyrights, patents, trademarks, and trade secrets

Question 13

What is an intangible resources

Answer 13

-Intangible resources are assets that are rooted deeply in the firm’s history, accumulate over time, and are relatively difficult for competitors to analyze and imitate

-compared to tangible resources, intangible resources:

-are less visible and more difficult for competitors to understand, purchase, imitate, or substitute for

-are more relied on to be the foundation for a firm’s capabilities 

-can be leveraged

Question 14

What are the 3 categories of the intangible resources

Answer 14

-Human resources

-innovation resources

-reputational resources

Question 15

What are the human resources of the intangible resources

Answer 15

-knowledge

-trust

-skills

-abilities to collaborate with others

Question 16

What are the innovation resources of the intangible resources

Answer 16

-ideas

-scientific capabilities

-capacity to innovate

Question 17

What are the reputational resources of the intangible resources

Answer 17

-brand name

-perceptions of product quality, durability, and reliability

-positive reputation with stakeholders such as suppliers and customers

Question 18

What are the core competencies

Answer 18

-core competencies:

-are capabilities that serve as a source of competitive advantage for a firm over its rival

-emerge over time through an organizational process of accumulating and learning how to deploy different resources and capabilities 

-the activities the company performs especially well compared to competitors 

-the activities through which the firm adds unique value to the goods or services it sells to customers

-two tools help firms identify their core competencies:

-the four criteria of sustainable competitive advantage

-value chain analysis

Question 19

What is outsourcing

Answer 19

-when the firm cannot create value in either a value chain activity or a support function, outsourcing is considered

-outsourcing is the purchase of a value-creating activity or a support function activity from an external supplier

Question 20

What are the advantages of outsourcing

Answer 20

-increase their flexibility

-mitigate risks

-reduce their capital investments

-probably gain coat advantage (buying from a specialized company)

-fully concentrate on those areas in which it has the potential to create value

Question 21

What are the concerns related to outsourcing

Answer 21

-the potential loss in a firm’s ability to innovate

-the loss of jobs within the focal firm (loss of human capital)