Chapter 3 Internal Organization

The average # of core competencies in an organization is

3 to 4

What are support activities?

Activities that provide assistance for the primary activities to take place more efficeintly

What creates and sustains a competitive advantage?

An organization's core competencies

Which two tools help firms identify and build core competencies?

Barney's 4 Criteria of a Sustainable Competitive Advantage (VRIO) and Porter's Value Chain

How do firms create value?

By exploiting core competencies or competitive advantages; by innovatively bundling and leveraging firm resources and capabilities

What are functions of HR?

Hiring, negotiation, benefits, performance review

Rarity refers to:

How many firms have this capability?

Inimitability refers to:

Is there a cost disadvantage in obtaining or developing the capability? it will cost the competitor more than it costs us to do this

Dell creating strict contracts with LOCAL suppliers in order to receive inventory in 4 hours is an example of created value in which activity?

Resource procurement

What does it mean to analyze resources?

To constantly consider what customers want or value when leveraging bundles to create the most value

The four criteria of the VRIO, in order, are:

Valuable, Rarity, Inimitability, Non-substitutable

The internal environment asks questions such as:

What can the company do? With their resources? Which capabilities? Matching what they might be able to do (the external environment) with what they can do (the internal environment).

VRIO model helps identify:

a firm's core competencies

What are primary activities?

activities that deal with the physical creation, sale, distribution, and servicing of a product or service = the business!

What does resource procurement refer to?

activities that enhance supplier strategy

the value chain proposes that each activity can either ___ or ___ value for the firm

add, detract

Service refers to anything that creates value ______ economic transaction

after the

What are intangible resources defined as?

assets routed in the firm's history and tha thave accumulated over time

What are tangible resources defined as?

assets that can be seen and quantified

Marketing builds __________________ while sales refer to __________________

awareness, accessibility

Two or more resources purposely combined to create value/achieve a task (by either making a product or process) is known as a :

capability

If a capability is not valuable; what is the competitive and performance implication?

competitive: disadvatange performance: below average returns

If a capability is not rare: what is the competitive and performance implication?

competitive: parity performance: average returns

If a capability is substitutable: what is the competitive and performance implication?

competitive: sustained advantage, performance: above average returns

If a capability is not costly to imitate: what is the competitive and performance implication?

competitive: temporary advantage performance: above average returns for short period of time

Capabilities that serve as a source of a competitive advantage for a firm over its rival:

core competencies

Not all organizations have ____ _________

core competencies

If a capability can meet the four criteria of the VRIO model, it is considered a _____ ______ that can generate a sustainable competitive advantage

core competency

Operations include all _____ activities that _____ customers

daily, serve

Intangible resources are usually ______.

developed

Valuable in the model refers to:

does the capability enable a firm to exploit an environmental opportunity, and or neutralize an environmental threat thereby creating value for customers?

Ways to build accessibility

experienced/increased number of sales representatives, distribution channels, dedicated sales forces for specific needs

What are four common categories of tangible resources?

financial, physical, technological, organizational

Examples of providing service

help call lines, a FAQ webpage, warranty, refunds

3 traits of Inimitability

historical conditions, causal ambiguity, social complexity

Value Chain model helps identify:

how to maximize a core competency

4 categories of support activities

human resources, administration/firm infrastructure, technology development, resource procurement

What are three common categories of intangible resources?

human, innovation and creativity, reputation

Technological development refers to the way technology can be used to:

improve efficiency or effectiveness in a way that results in more VALUE!

5 categories of primary activities

inbound logistics, operations, outbound logistics, marketing and sales, service

Customers of Volkswagen do not value a ____________ car from Volkswagen, so 15 yrs of investment was wasted.

luxury

If a capability detracts value/is not a core competency, the firm should _____ the capability

outsource

What are the 3 main activities in outbound logistics?

physical movement of goods from organization to storage, the economic transaction/sale, physical movement from storage to customers

When analyzing an internal organization, we need to analyze a firm's ______ __ _________ and ____________ of heterogeneous resources and capabilities

portfolio of resources; bundles

What are the types of activities in porter's value chain?

primary and support

Value is measured by

profit margins

Ways to market or build awareness

promotion, branding, endorsement, advertising

Individual assets of the company are known as:

resources

What technological development, commonly seen in grocery stores, has changed outbound logistics?

self check-out stations...creates value for a company by reducing labor costs and therefore increasing profit margins

historical conditions refers to

something the organization did wayyyy back that allows the capability to exist today

Customers of pet food home delivery value: _____ ______, which Pets.com did not provide

speedy delivery

What are strategic equivalents?

substitutable or alternative resources that can be used

Two types of resources:

tangible and intangible

Nonsubstitutable refers to:

the capability lacks a strategic equivalent

What are 3 main activities in inbound logistics?

the movement of product or services from suppliers to the organization, the storage of raw materials, and the physical movement of raw materials in the facility to the next step/process

social complexity refers to

the need for complex social phenomena to execute teh capability, a complex process fro humans executing the process

causal ambiguity refers to

the sequence (Cause/effect) of events for the capability is unclear or hard to understand/unclear, and cannot be easily replicated by others

What does it mean to have a global mindset?

to study the internal environment in ways that do not depend on the assumptions of a single country, culture, or context; important because of increasing global competition

What is Porter's Value Chain Analysis used for?

understanding a firm's cost position and identifying how to implement a business-level strategy

A competitive advantage occurs when firms offer value to customers that is ______ than the value competitors provide

value

To effectively bundle and leverage resources, firms must understand what customers:

value