Strategic Management – Chapter 4

Core competencies are
unique, deeply embedded, firm-specific strengths that allow firms to differentiate their products and services to create more value for consumers than their rivals or to offer products and services of acceptable value at lower cost.
Resources are assets
that a company can draw on when crafting and executing strategy. Capabilities are the organizational skills necessary to orchestrated a diverse sent of resources to deploy them strategically. Activities enable firms to add value by transforming inputs into goods and services.
Tangible resources
have physical attributes and are visible.
Intangible resources
have no physical attributes and are invisible.
Competitive advantage is
more likely to be based on intangible resources
The resources-based view makes
two critical assumptions: resources heterogeneity (resources differ across firms) and resources immobility (resources are sticky).
For a firm’s resource to be the basis of a competitive advantage,
it must have VRIO attributes: valuable (V), rare (R), and costly to imitate (I). The firm must also be able to organize (O) in order to capture the value of the resource.
Each primary activity the firm performs should
add incremental value directly by transforming inputs into outputs. Support activities sustain primary activities.
A network of primary and supporting firm
activities can create a strategic fit that can lead to competitive advantage
A strategic activity system conceives
of a firm as a network of interconnected activities. Firms need to upgrade their value activities over time, in response to changes in the external environment and to moves of competitors.
To sustain a competitive advantage,
any fit between a firm’s internal strengths and the external environment must be dynamic. This is accomplished through the ability to create, deploy, modify, reconfigure, or upgrade the resources base.
Several conditions make it costly for competitors it imitate another firm’s resources or capability that underlie it competitive advantage:
(1) better expectation of future resource value (or simply luck), (2) path dependence, (3) causal ambiguity, and (4) social complexity.
Formulating a strategy that increases and changes
of gaining and sustaining a competitive advantage is based on synthesizing insights obtained from an internal analysis of the company’s strengths (s) and weaknesses (W) with those form an analysis of external opportunities (O) and threats (T).
A SWOT analysis
by itself is insufficient to guide strategy formulation.
Resource heterogeneity
Assumption in the resource-based view that a firm is a bundle of resources and capabilities that differ across firms.
Resource immobility
Assumption in the resource-based view that a firm has resources that tend to be “sticky” and that do not move easily from firm to firm.