Chapter 4: Strategic Management
dynamic capabilities perspective
a model that emphasizes a firms 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
casual ambiguity
a situation in which the cause and effect of a phenomenon are not readily apparent
VRIO framework
a theoretical framework that explains and predicts firm level competitive advantage. a firm can give a competitive advantage if it has resources that are valuable V, rare R, and costly to imitate I, the firm also must organize O to capture the value of the resources
resources
any assets that a firm can draw on when formulating and implementing a strategy
value chain
internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value. Primary activities directly add values; support activities add value indirectly
organized to capture value
one of the four key criteria in the VRIO framework; the characteristic of having in place an effective organizational structure and coordinating systems to fully exploit the competitive potential of the firms resources and capabilities
costly to imitate resource
one of the four key criteria in the vrio framework; a resource is costly to imitate if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost
capabilities
organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically
path dependence
A situation in which the options one faces in the current situation are limited by decisions made in the past.
resource based view
a firm's resources and capabilities are the root cause of its performance
intangible resources
resources that do not have physical attributes and thus are invisible
tangible resources
resources that have physical attributes and thus are visible
resource stocks
the firms current level of intangible resources
resource flows
the firms level of investments to maintain or build a resource
core competencies
unique strengths. allows firms to differentiate its products and services from its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost
SWOT analysis
A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.
social complexity
A situation in which different social and business systems interact with one another
resource heterogeneity
Assumption in the resource-based view that a firm is a bundle of resources and capabilities that differ across firms.
primary 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.
valuable resource
One of the four key criteria in the VRIO framework; a resource is valuable if it allows the firm to take advantage of an external opportunity and/ or neutralize an external threat.
resource immobility
assumption in the resource based view that a firm has resource's that tend to be "sticky" and that do not move easily from firm to firm
isolating mechanisms
barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy
dynamic capabilities
describes a firms ABILITY to create, deploy, modify, reconfigure, upgrade, or leverage its resources for competitive advantage
activities
distinct and fine grained business processes that enable firms to add incremental value by transforming input into goods and services
support activities
firm activities that add value indirectly, but are necessary to sustain primary activities