Strategic Management, Chapter 4 Frank T. Rothaermel

core competencies

unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage

Resources

any assets that a firm can draw on when formulating and implementing a strategy

Capabilities

organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically

activities

distinct and fine-grained business processes that enable firms to add incremental value by transforming inputs into goods and services

Resource-based view

a model that sees certain types of resources as key to superior firm performance

VRIO Framework

A theoretical framework that explains and predicts firm-level competitive advantage.

valuable resource

A resource that helps a firm exploit an external opportunity or offset an external threat

rare resource

if only one or a few firms possess it

Imitate (costly to imitate)

if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost

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.

Isolating Mechanisms

barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy

path dependence

a situation in which the options one faces in the current situation are limited by decisions made in the past

casual ambiguity

a situation in which the cause and effect of a phenomenon are not readily apparent

social complexity

a situation in which different social and business systems interact with one another

Intellectual property (IP) Protection

a critical intangible resource that can provide a strong isolating mechanism, and thus help to sustain a competitive advantage

core rigidity

a former core competency that turned into a liability because the firm failed to hone, refine, and upgrade the competency as the environment changed

dynamic capabilities

a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage

resource stocks

the firm's current level of intangible resources

Resource flow

the firm's level of investments to maintain or build a resource

Value Chain

the internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value

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

support activities

firm activities that add value indirectly, but are necessary to sustain primary activities

strategic activity system

the conceptualization of a firm as a network of interconnected activities.

SWOT analysis

a framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weaknesses (S and W) with those from an analysis of external opportunities and threats (O and T)