Chapter 3 Flashcards
(24 cards)
internal analysis helps a firm
determine if its resources and capabilities are likely sources of competitive advantage
resource-based view
assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance
resources
tangible and intangible assets of a firm
capabilities
a subset of resources that enable a firm to take full advantage of other resources
the 4 categories of resources
financial
physical
human
organizational
2 critical assumptions of the Resource based view
resource heterogeneity
resource immobility
resource heterogeneity
a result of “bundling”
the VRIO framework
Value
Rarity
Cost of Imitability
Organizational Structure
if a firm’s resources are not valuable, then the firm can expect:
competitive disadvantage
if a firm’s resources are valuable but not rar, then the firm can expect:
competitive parity
if a firm’s resources are valuable and rare, then the firm can expect:
competitive advantage
______ resources are usually more costly to imitate than _______ resources.
intangible, tangible
imitation costs: unique historical conditions
first mover advantage
imitation costs: casual ambiguity
a tool that determines the strategic resource that a company has available to it
imitation costs: social complexity
the social relationships entailed in resources may be so complex that managers cannot really manage or replicate them
patents
offer a period of protection if the firm is able to defend its patent rights
if a firm’s resources are valuable, rare, but not costly to imitate then the firm can expect:
temporary competitive advantage
if a firm’s resources are valuable, rare, and costly to imitate then the firm can expect:
sustained competitive advatage
Organization
a firm’s structure and control mechanisms must be aligned so as to give people ability and incentive to exploit the firm’s resources
competitive dynamics
the strategic decisions and actions of firms in response to the strategic decisions and actions of other firms
a firm’s 3 possible responses to competitive dynamics
no response
change tactics
change strategy
imitation will _____ lead to competitive advantage
seldom
internal analysis tells us:
what the firm should do, given the relative strengths and weaknesses of resources and capabilities
competitive advantage will be sustained if
other firm’s costs of imitation are greater than the benefits, and the firm is organized to exploit advantages
