Internal Analysis RBV

Question 1

Formulate a strat to get a CA by

Answer 1

Combining resources and capabilities to form core competencies

Question 2

Evaluation

Answer 2

PESTEL
Porter’s Five Forces
Strategic Growth Map

Question 3

Firm environment

Answer 3

External environment => Industry => Strategic Group => Firm

Question 4

How should strengths be

Answer 4

Dynamic
Adjust with external environment
Strategically fit within the environment (r,c,c)

Question 5

South West Airlines different bc

Answer 5

Resource heterogeneity + resource immobility around SWA’s higher employee productivity

Question 6

Core Competencies

Answer 6

Unique strengths
Embedded deep within a firm
Allow firm to differentiate from rivals

Question 7

Honda CC

Answer 7

Expertise in small, powerful, and reliable engines

Question 8

Beats CC

Answer 8

Coolness marketing

Question 8

Five Guys CC

Answer 8

Highest-quality ingredients, free toppings, simple menu, no drive-thru

Question 9

Tesla CC

Answer 9

Engineering expertise in battery-powered motors & power trains

Question 10

Netflix CC

Answer 10

Proprietary algorithms based on individual customer preferences

Question 11

CA flow diagram

Answer 11

Resources + capabilities => CC => Activities => CA => reinvest proceeds into R+C

Question 11

Resources

Answer 11

Assets firms can draw on

Question 12

Capabilities

Answer 12

Organization & managerial skills

Question 14

RBV Model

Answer 14

Aids in identifying CCs - resources are key to superior firm performance

Question 15

RBV: Types of resources

Answer 15

Tangible & intangible

Question 16

RBV: Google Tangible vs Intangible

Answer 16

$59B vs $300B

Question 17

RBV: 2 Critical Assumptions

Answer 17

Resource Heterogeneity & Resource Immobility

Question 18

RBV: Critical Assumption: Resource Heterogeneity

Answer 18

• Firm is a unique bundle of resources, capabilities, and competencies
• These bundles differ across firms

Question 18

RBV: Critical Assumption: Resource Immobility

Answer 18

• Resources are “sticky,” and don’t move easily from firm to firm
• Resources are difficult to replicate
• Resources can last for a long time

Question 19

VRIO

Answer 19

Tool for evaluating firm resource endowments
- Jay Barney pioneer
- Michael Porter builds on it to discuss how extenv & 5Fs influence Rs

Question 20

VRIO: If in order, no…

Answer 20

Competitive Disadvantage
Competitive Parity
Temporary CA
Temporary CA

If all yes: Sustainable CA

Question 21

VRIO: Valuable

Answer 21

• Helps to exploit an opp or offset a threat
• Either increases perceived value OR reduces cost to manufacture

Question 22

VRIO: Rare

Answer 22

- Only one / few firms possess it

Question 23

VRIO: Costly to imitate

Answer 23

- Competitors can’t develop it for a reasonable price - Imitation & substitution (strategic equivalence) are risks

Question 24

VRIO: Organized to capture value

Answer 24

Effective internal organizational structure & coordinating systems

Question 25

Core rigidity + Causes + Results

Answer 25

Former core competency turned into a liability - Result of environmental change - No longer fits the external environment - Causes loss of CA - Firm may go out of business

Question 26

Direct imitation VS substitution

Answer 26

Completely copying another company's strategy or product VS adapting or modifying elements of a successful strategy to create a similar outcome Eg Crocs VS Amazon and book stores

Question 26

Barriers to imitation

Answer 26

- Better expectations of future resource value - Path dependence: past decisions limit current options - Causal ambiguity: cause and effect are vague - Social complexity: social and business systems interact - Intellectual Property protection

Question 27

Dynamic capability

Answer 27

Firm's ability to: - Adapt resources over time - Create, deploy, modify, reconfigure, upgrade, leverage resources

Question 28

Dynamic capability - goal

Answer 28

- Create long-term CA - Develop r,c,c - Create a strategic fit with the firm’s environment - Change in a dynamic fashion based on changes in environment - Create market changes

Question 29

Resource stocks

Answer 29

- Firm’s current level of intangible resources - New product development, engineering expertise, innovation capability

Question 30

Resource flows

Answer 30

Firm’s level of investments to maintain or build a resource

Question 31

Bathtub Metaphor

Answer 31

Inflows (investments in resources) => Intangible Resource Stocks => Outflows

Question 32

Value Chain

Answer 32

Internal activities a firm engages in when transforming inputs into output - Includes primary and support activities - Each activity adds incremental value, and incremental costs

Question 33

Value Chain: Primary Activities

Answer 33

Add value directly - Supply chain management - Operations - Distribution - Marketing and sales - After-sales service

Question 34

Value Chain: Support Activities

Answer 34

Add value indirectly - Research and development (R&D) - Information systems - Human resources - Accounting and finance - Firm infrastructure including processes, policies, and procedures

Question 35

SWOT Intentions

Answer 35

- Synthesizing external & internal analysis - Leverage internal strengths to exploit external opportunities - Mitigate weaknesses & external threats - Formulate strategy tailored to the firm => strategic fit

Question 36

SW, OT

Answer 36

S & W - VRIO O & T - PESTEL

Question 37

Strategic Activity System

Answer 37

Network of interconnected activities - Can be foundation of CA - Socially complex & causally ambiguous - Enhance likelihood of SCA

Question 38

Strategic Activity Systems: Characteristics

Answer 38

- One or more elements can be easily observed - How activities are managed is not as easily observed - Difficult to imitate

Question 39

Evolution of Strategic Activity Systems

Answer 39

- Add new activities - Remove activities no longer relevant - Upgrade activities that have become stale/obsolete