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Strategic Management Ch 4: Internal Analysis

Terms in this set (27)

core competencies
unique strengths, embedded deep within a firm, that allow a company to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost
resources
any assets that a firm can draw on when formulating and implementing a strategy. These reinforce core competencies towards creating competitive advantage
capabilities
organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically. These orchestrate core competencies towards creating competitive advantage
activities
distinct and fine-grained business processes that enable firms to add incremental value by transforming input into goods and services. These leverage core competencies in order to create competitive advantage
resource-based view
a model that sees certain types of resources as key superior firm performance. If a resource exhibits VRIO attributes, the resources enables the firm to gain and sustain a competitive advantage. Requires two assumptions: resource heterogeneity and resource immobility
tangible resources
resources that have physical attributes and thus are visible
intangible resources
resources that do not have physical attributes and thus are invisible
resource heterogeneity
this is the assumption in the resource-based view that a firm is a bundle of resources and capabilities that differ across firms
resource immobility
this is the 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
VRIO framework
a theoretical framework that explains and predicts firm-level competitive advantage. A firm can gain a competitive advantage if it has resources that are valuable, rare, and costly to imitate. It must also organize itself to capture the value of the resource.
valuable resource
one of the four key criteria in the VRIO framework. It must help a firm to increase the perceived value of its product or service, either by adding attractive features or lowering cost, in order to pass this criterion
rare resource
one of the four key criteria in the VRIO framework. In order to meet this criterion, the resource must be held by fewer firms than the number required to be in perfect competition industry
costly-to-imitate resource
One of the four key criteria in the VRIO framework. In order to meet this criterion, firms that do not possess the resource are unable to buy, or develop, the resource at a comparable cost
organized to capture value
one of the four key criteria in the VRIO framework. The firm must have an effective structure, processes, and systems to fully exploit the competitive potential of the firm's resources, capabilities, and competencies
isolating mechanisms
these are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy. Includes better expectations of future resource value, path dependence, causal ambiguity, and social complexity
better expectations of the future
this isolating mechanism is difficult to imitate if the firm views the value of a resource to be greater in the future than it is currently valued, so they acquire the resource
path dependence
this isolating mechanism is a situation in which the options one faces in the current situation are limited by decisions made in the past. An example is R&D that cannot be imitated immediately and requires time to develop
causal ambiguity
this isolating mechanism is a situation in which the cause and effect of a phenomenon are not readily apparent; it is not clear how something is accomplished through processes a firm does
social complexity
this isolating mechanism is a situation in which different social and business systems interact with one another; it is a specific case of causal ambiguity where the interactions between systems are the source of ambiguity
dynamic capabilities
a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage. These allow a firm to adapt, and even influence, changing external conditions
dynamic capabilities perspective
a model that emphasizes a firm's ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment
resource stocks
the firm's current level of intangible resources; these are the reserves of resources
resource flows
the firm's level of investments to maintain or build a resource; these fill the resource stocks. The metaphor used is that resource stocks are the contents of a bathtub and these are used to fill that bathtub.
value chain
the internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value. Primary activities directly add value; support activities add value indirectly
primary activities
firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain. These include supply chain management, operations, distribution, marketing & sales, and after-sales service.
support activities
Firm activities that add value indirectly, but are necessary to sustain primary activities. These include R&D, information systems, human resources, accounting and finance, and firm infrastructure (processes, policies, and procedures)
SWOT analysis
a framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weaknesses with those from an analysis of external opportunities and threats.
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