Chapter 4
Valuable Resource
a resource if valuable if it helps a firm exploit an external opportunity or offset an external threat
VRIO Framework
a theoretical framework that explains and predicts firm-level competitive advantage Valuable Rare, and costly to Imitate. And finally, the firm itself must be Organized to capture the value of the resources
Resources
any assets that a firm can draw on when formulating and implementing a strategy tangible or intangible
Rare Resource
are 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
Costly to imitate resource
if the firms that do not possess the resource are unable to develop or buy the resource at the comparable cost
Value chain
internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value
Capabilities
organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically. intangible
decisions under certainty
Probability (P) = 1 Many critical decisions we make are NOT certain
decisions under uncertainty
Probability (P) = ?
decisions under risk
Probability 0 < P < 1 Spectrum of probability; low high or in between
if the firm IS organized to capture value, costly to imitate, rate, and valuable.
sustainable competitive advantage
If the resource is valuable, rare, BUT NOT costly to imitate
temporary competitive advantage
If the resource is valuable, rare, costly to imitate, but firm is not organized to capture value
temporary competitive advantage 2
Organized to capture value
the characteristic of having in place an effective organizational structure, processes, and systems to fully exploit the competitive potential of the firm's resources, capabilities, and competencies.
Core Competencies
unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage.
If the resource, capability, or competency is not valuable resource...
competitive disadvantage
If the resource, capability, or competency is not rare resource...
competitive parity
intangible resources
have no psychical attributes and thus are invisible
tangible resources
have physical attributes and are visible