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


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


Table 4.1 Tangible Resources


Table 4.2 Intangible Resources


Tools for Building Core Competencies

Sustainable Competitive Advantage

ValueChain

Analysis


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


Table 4.6 Examining the Value‐Creating Potential of Primary Activities


Table 4.7 Examining the Value‐Creating Potential of Support Activities


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


Documents

HITT Chapter 04 [Compatibility Mode]