Unique strengths embedded deep within a firm
Core competencies are built through the interplay of:
resources and capabilities
Assets such as cash, buildings, or intellectual property that a company can draw on when crafting and executing a strategy
The organizational and managerial skills necessary to orchestrate a diverse set of resources and to deploy them strategically
Things that enable firms to add value by transforming inputs into goods and services
Activities leverage _______ for competitive advantage.
A model that sees resources as key to superior firm performance
Competitive advantage is more likely to spring from ______ rather than ______ resources.
2 critical assumptions in the resource-based model
1. Resource heterogeneity 2. Resource immobility
Assumption that a firm is a bundle of resources and capabilities that differ across firms
Assumption that a firm has resources that tend to be "sticky" and that do not move easily from firm to firm
For a resource to be the basis of a competitive advantage, it must be:
valuable, rare, costly to imitate, and the firm must organize to capture the value of the resource VRIO Framework
A firm can gain and sustain a competitive advantage only when it:
has resources and capabilities that satisfy the VRIO criteria
Valuable but not rare resource=
valuable, rare, but not costly to imitate-->
temporary competitive advantage
valuable, rare, costly to imitate, but not organized to capture value-->
temporary competitive advantage
A resource is _____ if it allows the firm to take advantage of an external opportunity and/or neutralize an external threat.
A resource is _____ if the number of firms that possess it is less than the number of firms it would require to reach a state of perfect competition.
Competitive advantages can often be taken away as a result of:
A resource is _______ if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.
Describes the internal activities a firm engages in when transforming inputs into outputs
The value chain is divided into:
primary and support activities
Firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain
Firm activities that add value indirectly, but are necessary to sustain primary activities
The conceptualization of a firm as a network of interconnected activities
Strategic activity system
The concept of the _____ demonstrates the difficulty of using imitation as a path to competitive advantage.
strategic activity system
A model that emphasizes a firm's ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment
Dynamic capabilities perspective
Describe a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage
Dynamic capabilities are an ______ resource.
The firm's current level of intangible resources.
The firm's level of investments to maintain or build a resource.
4 ways to protect a competitive advantage
1. Better expectations of future resource value 2. Path dependence 3. Causal ambiguity 4. Social complexity
A situation in which the options one faces in the current situation are limited by decisions made in the past.
Situation in which the cause and effect of a phenomenon are not readily apparent
Situations in which different social and business systems interact with one another
When resources are bundled together they form:
If capabilities are valued by customers they may be:
Management's failure to recognize the importance of changing external conditions because they are blinded by their shared, strongly held beliefs
Former core competencies that sow the seeds of organizational inertia and prevent the firm from responding appropriately to changes in the environment
What Criteria Make Core Competencies Costly to Imitate?
Unique Historical Condition
Causual Ambiguity
Social Complexity
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