Resources and Capabilities

Question 1

What are resources in strategy?

Answer 1

Assets owned or controlled by a firm that it can use to carry out its strategy

Think: buildings, patents, staff, money, brand reputation

Question 2

What are capabilities?

Answer 2

The organisations ability to use its resources effectively to gain competitive advantage

e.g. Amazon’s logistics is a capability, not just a resource

Question 3

Why are resources and capabilities important to strategy?

Answer 3

They help determine whether a company can implement and sustain its strategy

Question 4

What’s the difference between resources and capabilities?

Answer 4

Resources = ‘what’ the firm has
Capabilities = ‘how’ it uses them

Question 5

How are they examined in the E3 exam?

Answer 5

Often as part of a resource audit or when testing if a strategy is feasible

Question 6

What is a resource audit?

Answer 6

The 9Ms Model

Question 7

What model helps structure a resource audit?

Answer 7

The 9M’s Model

Question 8

What are the 9Ms?

Answer 8

Manpower, Money, Machinery, Materials, Markets, Management, Methods, Make-up (culture), Management Information Systems

Mnemonic: 9 Ms Make Strategy Move

Question 9

Application Tip - how to use 9Ms in the exam?

Answer 9

Use when addressing whether the business has the internal strength to grow or diversify

Question 10

What are threshold resources?

Answer 10

Basic resources required just to compete

E.g. trucks for a courier company

Question 11

What are distinctive resources?

Answer 11

Resources that are rare or difficult to imitate, giving advantage

E.g. Apple’s brand or Tesla’s battery tech

Question 12

What are threshold capabilities?

Answer 12

Basic abilities that support operational success

Question 13

What are core / distinctive capabilities?

Answer 13

Skills / processes that are superior to rivals and help win customers

App: Mention these when comparing two competitors in a scenario

Question 14

What does VRIO stand for?

Answer 14

Value
Rarity
Inimitability
Organisational support

Question 15

What makes a resource valuable [V]?

Answer 15

It helps reduce costs or increase revenue

Question 16

What makes it rare [R]?

Answer 16

Few competitors have it

Question 17

What makes it inimitable [I]?

Answer 17

Hard to copy due to complexity, history or culture

Question 18

What does [P] mean in VIRO?

Answer 18

Organisation support - systems and structure must allow the resource to be exploits

E.g. Google’s culture supports innovation

Question 19

What are dynamic capabilities?

Answer 19

A firm’s ability to change, adapt, and reconfigure its resources in response to change

Question 20

What are the 3 types of dynamic capability?

Answer 20

1. Sensing [spotting opportunities]
2. Seizing [taking action]
3. Transforming [reconfiguring resources]

Question 21

Real-life example of dynamic capability?

Answer 21

Netflix moving from DVD rental to streaming

E.G. Tech disruption

Question 22

What exam trigger shows dynamic capabilities are needed?

Answer 22

When the case talks about ‘fast change’, ‘innovation’, or ‘new market entry’

Question 23

Porter’s Value Chain

Answer 23

A model that breaks down business activities into steps that add value to the customer

Question 24

What is inbound Logistics?

Answer 24

Receiving / storing / handling inputs

E.g. Amazon’s warehouse receiving deliveries from suppliers

Question 25

What is Operations?

Answer 25

Converting inputs into the final product e.g. Toyota assembling cars in its manufacturing plants

Question 26

What is Outbound Logistics?

Answer 26

Delivering the finished product to the customer e.g. McDonald's packaging food and handling it to customers

Question 27

What is Marketing & Sales?

Answer 27

Activities that promote the product and persuade the customer to pay e.g. Apple's product launches and premium advertising campaigns

Question 28

What is After-Sales Service?

Answer 28

Support provided post-purchase to enhance customer satisfaction e.g. Samsung's repair services and warranties

Question 29

What is Firms infrastructure?

Answer 29

Company systems / planning / finance / legal e.g. Apple's executive management and strategy teams

Question 30

What is HR Management?

Answer 30

Recruiting / training / retaining staff e.g. Google's recruitment and employee perks strategy

Question 31

What is Technology Development?

Answer 31

R&D / product design / tech support e.g. Tesla developing it's self-driving software

Question 32

What is Procurement?

Answer 32

Buying inputs needed for operations e.g. Starbucks sourcing ethically grown coffee beans

Question 33

What's the purpose of value chain analysis?

Answer 33

Identify strengths/weaknesses and reduce waste or increase differentiation

Question 34

When do you use Porter's Value Chain in exam?

Answer 34

When asked to evaluate internal efficiency or competitive advantage

Question 35

What is a business model?

Answer 35

How the organisation creates, deliveries and captures value

Question 36

What are common value drivers?

Answer 36

Innovation, efficiency, customer satisfaction, brand

Question 37

REAL LIFE EXAMPLE: How does Ryanair create value?

Answer 37

How does Ryanair create value? Extreme cost efficiency and charging for extras

Question 38

What are the 4 stages of the Product Life Cycle PLC?

Answer 38

Introduction Growth Maturity Decline

Question 39

Why is PLC useful?

Answer 39

Helps with decisions about investment, marketing and divestment

Question 40

What does the BCG Matrix analyse?

Answer 40

Product portfolio based on Market Growth & Market Share

Question 41

What is a STAR in the BCG Matrix?

Answer 41

High growth, High Market Share e.g. Tesla's electric vehicle division (growing demand, strong position) tip: Stars need investment to maintain growth

Question 42

What is a CASH COW in the BCG Matrix?

Answer 42

High Market Share, Low Market Growth Generates steady cash e.g. MS Office or Gillette razors tip: Use profits from Cash Cows to fund Stars or Question Marks

Question 43

What is a QUESTION MARK in the BCG Matrix?

Answer 43

Low Market Share, High Market Growth e.g. Facebook's VR headsets (growing sector, but small share)

Question 44

What is a DOG in the BCG Matrix?

Answer 44

Low Market Share, Low Market Growth e.g. DVD rentals, Blackberry smartphones Typically divested unless they serve a strategic niche or might be a 'add on product' for something else in the product portfolio

Question 45

What is benchmarking

Answer 45

Comparing performance with best-in-class to find improvement areas

Question 46

Types of benchmarking

Answer 46

Internal: Comparing across teams or branches in the same business e.g. comparing Amazon warehouse in Germany vs UK Competitive: Comparing with direct competitors in the same industry e.g. Samsung v Apple on R&D efficiency Functional (best in class): Comparing with any high performer, even in another indistry e.g. Ryanair learning turnaround speed from Formula 1 pit stops

Question 47

Steps of Benchmarking

Answer 47

1 Define - what you want to measure (costs / quality) 2 Measure - current performance 3 Compare with others (competitor or best-in-class) 4 Identify performance gaps 5 Act - develop plans to close the gap

Question 48

Pros and Cons of benchmarking

Answer 48

✅ Advantages Reveals performance gaps Motivates improvement Adopts proven best practices Aids realistic goal setting ❌ Disadvantages Can encourage copying, not innovation Hard to get competitor data Differences in scale or market may distort results 💡 Use when the case mentions underperformance, inefficiency, or planning improvements.