Chapter 4 Take-Away Concepts
Distinguish among a firm's resources, capabilities, core competencies, and firm activities
- Core competencies are unique, deeply embedded, firm-specific strengths that allow firms to differentiate their products and services to create more value for consumers than their rivals or to offer products and services of acceptable value at a lower cost - resources are assets that a company can draw on when crafting and executing strategy. capabilities are the organizational skills necessary to orchestrate a diverse set of resources to deeply them strategically. activities enable firms to add value y transforming inputs into goods and services
IKEA , Google, Netflix example of core competencies and applications
- IKEA: Core competencies- Designing modern functional home furnishings at low prices offered in a unique retail experience Applications- Fully furnished room setups, practical tools for all rooms, do-it-yourself - Netflix: Core Competencies: Providing internet subscription services for televised media combined with superior algorithms to track individual customer preferences Applications: Online subscriptions, streaming, connection to game consoles - Google: Core Competencies: Developing proprietary search algorithms Applications: Gmail, Google Maps/Earth, Adwords, Google Books, Google Scholar
Identify competitive advantage as residing in a network of firm activities
- each primary activity the firm performs should add incremental value directly by transforming inputs into outputs. support activities sustain primary advantage - a network of primary and supporting firm activities can create a strategic fit that can lead to competitive advantage - a strategic activity system conceives of a firm as a network of interconnected activities. firms need to upgrade their value activities over time, in response to changes in the external environment and to moves of competitors
Conduct a SWOT analysis
- formulating a strategy that increases the chances of gaingin and sustaining a competitive advantage is based on synthesizing insights obtained from an internal analysis of the company's strengths and weaknesses with those from an analysis of exernal opportunities and threats - a SWOT analysis by itself is insufficient to guide strategy formulation
Apply the VRIO Framework to assess the competitive implication's of a firm's resources
For a firm's resources to be the basis of a competitive advantage, it must have VRIO attributes: value, rare, and costly to imitate. the firm must also be able to organize in order to capture the value of the resource
Differentiate between tangible and intangible resources
Tangible resources have physical attributes and are visible. intangible resources have no physical attributes and are invisible. Competitive advantages Is more likely to be based on intangible resources
identify different conditions that allow firms to sustain their competitive advantage
several conditions make it costly for competitors to imitate another firm's resources or capability that underlie its competitive advantage: 1. better expectations of future resource value (or simply luck) 2. path dependence 3. casual ambiguity 4. social complexity
Describe the critical assumptions behind the resource-based view
the RBV makes two critical assumptions: resource heterogeneity (resources differ across firms) and resource immobility (resources are sticky)
Outline how dynamic capabilities can help a firm sustain competitive advantage
to sustain a competitive advantage, any fit between a firm's internal strengths and the external environment must be dynamic. this is accomplished through the ability to create, deploy, modify, reconfigure, or upgrade the resource base.
