Download - HITT Chapter 04 [Compatibility Mode]
The Internal Environment: Resources,Capabilities, and Core Competencies
RESOURCES: inputs into a firm’s production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers.
CAPABILTIES: is the capacity for a set of resources to perform a task or an activity in an integrative manner.
CORE COMPETENCIES: resources and capabilities that serve as a source of sustained competitive advantage for a firm over its rivals.
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o Resources, capabilities, and core competencies provide the foundation of competitive advantage
o Resources are bundled to create organizational capabilities.
o Capabilities, in turn, are the source of a firm’s core competencies, which are the basis of competitive advantages
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VALUEBy exploiting core competencies or competitive advantages firms create value for customers
Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay
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Table 4.1 Tangible Resources
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Table 4.2 Intangible Resources
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Tools for Building Core Competencies
Sustainable Competitive Advantage
ValueChain
Analysis
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Table 4.4: The Four Criteria of Sustainable Competitive Advantage
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DefinitionsValuable capabilities Allow the firm to exploit opportunities to
generate revenues and/or neutralize threats to reduce costs
Rare capabilities Those capabilities possessed by few, if any, current or potential competitors
Costly‐to‐imitate capabilities Capabilities that other firms cannot easily develop
Nonsubstitutable capabilities Capabilities that do not have strategic equivalents
Organized to be exploited Firms have the correct structure, control systems, and reward systems to support each source of competitive parity, temporary competitive advantage, and sustained competitive advantage
Table 4.5
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Value Chain Analysis
ActivitiesPrimary activities Involved with a product’s physical creation, its sale
and distribution to buyers, and its service after the sale
Support activities Provide the assistance necessary forthe primary activities to take place
Figure 4.4 The Basic Value Chain
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Table 4.6 Examining the Value‐Creating Potential of Primary Activities
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Table 4.7 Examining the Value‐Creating Potential of Support Activities
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Outsourcing• Outsourcing is the purchase of a value creating
activity from an external supplier.
• Four skills are essential for managing outsourcing:• strategic thinking• deal making• partnership governance• change management
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