Global Strategic Analysis: Strategic Capability

Vocabulary flashcards covering Session 3: Strategic Capability from Global Strategic Analysis, including RBV principles, resource taxonomy, threshold and core competences, Porter's Value Chain and Value Network, benchmarking, and Barney's VRIO framework.

Strategic Management Framework (Exploring Strategy Model)

The overarching strategic model that links three main elements: the strategic position (environment, strategic capability, and expectations & purposes), strategic choices, and strategy into action.

Resource-Based View (RBV)

A strategy framework proposed by Barney (1991) asserting that competitive advantage and superior performance stem from the distinctiveness of an organization's resources and capabilities rather than industry structure alone.

Imperfect Mobility of Resources

The strategic condition wherein resources and capabilities cannot easily be transferred, traded, or imitated by competitors, enabling differences between firms to persist over time.

Resources

Assets that organizations have or can call upon, expressed as nouns or 'things' (such as a patent, a product, or a factory).

Capabilities / Competences

The ways an organization deploys its assets, representing the activities a firm knows how to do, expressed using verbal forms (such as knowing how to innovate or serve clients).

Tangible Resources

Physical and financial assets that an organization possesses, including machinery, vehicles, factories, cash, and receivables.

Intangible Resources

Non-physical corporate assets divided into human resources (knowledge, skills, and motivation) and non-human resources, which include technological assets (patents, technology) and organizational assets (brand, reputation).

Strategic Capabilities Matrix

A four-box matrix mapping resources and competences against threshold requirements versus sources of competitive advantage, separating threshold resources and competences from unique resources and core competences.

Threshold Capabilities

The baseline capabilities essential for an organization to enter or compete in a given market—required merely to 'be in the game'—whose minimum standards change over time.

Threshold Resources

Tangible or intangible assets required by any player to meet minimum industry requirements (for example, ABS technology in the automotive business).

Threshold Competences

Fundamental business processes and activities required to participate in an industry (for example, having product innovation teams in the automotive business).

Unique Resources

Rare and distinct tangible or intangible assets that competitors do not possess and cannot easily acquire, such as proprietary patents.

Core Competences

Complex skills and activities through which resources are integrated to deliver competitive advantage and superior performance (for example, an integrated software and data ecosystem capability).

Strategic Profile (Business Profile)

A comparative diagnostic tool that plots and scores internal functional dimensions of resources and competences on a scale (e.g., 1 to 5 or 1 to 6) to benchmark a company's relative strengths and weaknesses against rivals.

Value Chain

A framework developed by Michael E. Porter (1985) analyzing how value is added or cost is incurred across primary activities and support activities to generate a profit margin.

Primary Activities

The sequential chain of operational activities directly handling the physical product or service: inbound logistics, operations, outbound logistics, marketing and sales, and service.

Support Activities

Organizational functions that sustain and improve primary value-chain activities: firm infrastructure, human resource management, technology development, and procurement.

Bases of Cost Advantage

Cost-reduction drivers across the value chain, including economies of scale, input advantages (location, bargaining power, vertical integration, JIT coordination), product design for automation, manufacturing techniques, and capacity utilization.

Value Network

The wider system of inter-organizational relationships connecting supplier value chains, an organization's value chain, channel value chains, and customer value chains to create and deliver a final offering.

Benchmarking

A technique for diagnosing and improving organizational performance by comparing operations historically (past years), across the industry (competitors), or against the best-in-class performers across sectors.

VRIO Analysis

A strategic tool (Barney, 2007) assessing whether an organization's capabilities are Valuable, Rare, Inimitable, and backed by the Organization to evaluate their competitive implications.

Competitive Disadvantage (VRIO)

The competitive implication when an organization lacks a valuable capability ($\text{Value = No}$), representing an organizational weakness and resulting in below-normal performance.

Competitive Parity (VRIO)

The competitive outcome when an organization possesses a capability that is valuable ($\text{Yes}$) but not rare ($\text{No}$), delivering normal industry performance.

Temporary Competitive Advantage (VRIO)

The competitive outcome when a capability is valuable ($\text{Yes}$) and rare ($\text{Yes}$), but not inimitable ($\text{No}$), producing above-normal profits until rivals copy it.

Sustainable Competitive Advantage (VRIO)

The strategic position achieved when a capability is valuable ($\text{Yes}$), rare ($\text{Yes}$), inimitable ($\text{Yes}$), and fully supported by organizational arrangements ($\text{Yes}$), delivering lasting above-normal returns.

Dynamic Capabilities

The organization's abilities to renew, recreate, and adapt strategic capabilities over time to respond effectively to changing environmental conditions.