Session 5: Internal Analysis (Lucas) Flashcards
Internal analysis: Resources, competencies, and capabilities (17 cards)
What is the purpose of an internal analysis?
To formulate a strategy that leads to a sustained competitive advantage by identifying and leveraging core competencies.
What are core competencies?
Unique strengths embedded deep within a firm that enable differentiation and/or cost advantage, often expressed through structures, processes, and routines.
What are resources in the context of strategy?
Assets firms can use to craft and execute strategy, such as cash, buildings, machinery, or IP.
What are capabilities?
Organisational and managerial skills needed to orchestrate resources, including structure, routines, and culture.
How are activities different from capabilities?
Activities are distinct, fine-grained business processes like order taking and invoicing.
What does the resource-based view (RBV) focus on?
Identifying core competencies and recognising that resources, capabilities, and competencies drive superior firm performance.
What are the two types of resources based on RBV?
Tangible (physical and visible) and intangible (non-physical and invisible).
What are examples of intangible resources?
Brand equity, company culture, IP, knowledge, and reputation.
What are the two critical assumptions of the RBV?
Resource heterogeneity and resource immobility.
What is resource heterogeneity?
The idea that each firm possesses a unique bundle of resources, capabilities, and competencies.
What is resource immobility?
Resources are “sticky” and difficult to transfer or replicate across firms.
What does VRIO stand for?
Valuable, Rare, Inimitable, Organised to capture value.
What does the VRIO framework help evaluate?
Whether a firm’s resources provide a sustained competitive advantage.
What are isolating mechanisms?
Factors that prevent rivals from eroding a firm’s competitive advantage.
How does intellectual property protect competitive advantage?
By legally restricting the use or imitation of key innovations or processes.
What are the three generic strategies for achieving competitive advantage?
Differentiation, Cost Leadership, and Blue Ocean Strategy.
How does a firm benefit from core competencies?
They allow the firm to deliver higher value to customers or operate at lower costs, enhancing its strategic position.
