Chapter 4 Internal Analysis: Resources, Capabilities, and Core Competencies

To formulate a strategy that leads to a sustained competitive advantage: (2)

• Resources and capabilities must combine to form core competencies.

• Firms should consciously work to identify these

what are core competencies

Unique strengths

what is resource-based view

model that helps identify core competencies

what is resource heterogeneity 

A firm is a unique bundle of resources, capabilities and competencies

what is resource immobility

what is VRIO

delete

what does VRIO stand for

• Valuable.

• Rare.

• Costly to Imitate.

• Organized to capture the value of the resource.

what are isolating mechanisms 

sustain a firm’s competitive advantage by preventing rivals from competing away the firm’s advantages

what is core rigidity

A former core competency that is turned into a liability

what is resource stock

firm’s current level of intangible resources

what is resource flows

The firm’s level of investments to maintain or build a resource

what is firm value chain

Internal activities a firm engages in when transforming inputs into outputs

what are primary activities

Firm activities add value directly

what are support activities

Firm activities that add value indirectly

why must a strategic activity system must evolve (2)

External environment changes

Competitors develop their activity systems