Internal Analysis Flashcards
(17 cards)
What is the level of internal analysis?
A single firm within an industry
What is a resource?
A productive input or competitive asset that is owned or controlled by a company
What are the two types of resources?
Tangible: visible, physical attributes (labour, capital, land, equipment, supplies)
Intangible: invisible, no physical attributes (culture, knowledge, reputation)
What is a capability?
The capacity of a firm to perform some activity proficiently using resources, emerges over time through complex interactions, and is often knowledge based
What is a competence?
type of capability that allows a company to expand scope of business
What is a core competence?
unique, deeply embedded, firm-specific strengths that allow companies to differentiate products or offer lower price and create more value
What is an activity
distinct and fine-grained business processes that enable firms to add incremental value by transforming input into goods and services
What is the resource base view of the firm?
a framework which is used to determine the resources which are key to firm’s superior performance
Explain each aspect of VRIO
Value: enable the firm to create value by negating threats or leveraging opportunities
Rarity: how many competing firms already possess specific values and capabilities
Inimitability: difficult to imitate
Organized: Organized to capture value
What are the 2 assumptions which are critical in explaining superior firm performance in RBV?
Resource Heterogeneity: firm is a bundle of resources, capabilities, and competencies that differ across firms
Resource Immobility: firm has resources that tend to be ‘sticky’ and do not move easily firm to firm
What are the barriers to imitation?
Better Expectations of Future Values: Buying resources at a low cost, first mover advantage
Path Dependence: current alternatives are limited by past decisions, decisions evolve over a long period of time
Causal Ambiguity: causes of success or failure is not apparent, inputs and outputs are observable but not the process, multiple paths to the same outcome
Social Complexity: two or more systems interact creating many possibilities, tacit knowledge (process, routines, interactions) are less apparent to competitors
When are resources strategically valuable?
- Hard to copy
- Depreciates slowly
- Your company controls its value
- It cannot be easily substituted
- Better than competitors’ similar resources
What is the value chain analysis on a firm level?
Internal activities a firm engages in when transforming inputs into outputs
What are primary and support activities?
primary: firm activities that add value directly by transforming inputs into outputs as firms move a product/service horizontally along internal value chain
support: firm activities that add value indirectly but necessary to sustain primary activities
Examples of primary activities
supply chain management, operations, distribution, market and sales, after sales service
Examples of support activities
R&D, Info Systems, HR, Accounting and Finance, Processes/policies
How can efficiency and effectiveness be improved in the value chain?
-best practices for high cost activities
-redesign products to eliminate high cost components
-outsource activities that can be performed cheaply
-stop activities that add no/low customer value
