| What are we looking at when analysing resources and capabilities? And what are we trying to explain? And what assumptions are we using when looking at this? | We are analyzing the organisation! One company outcompetes others – this is not explained by external environmental factors or industry conditions.
Assumptions:
• organizations have different resources and capabilities
• it is not easy for one organization to imitate or obtain R&Cs of another. |
| What is the difference between resources and capabilities? | Resources: what an organization has. Sometimes also called ‘assets’
Capabilities: Ability to deploy resources. Sometimes also called ‘competencies’ |
| What is the difference between threshold and distinctive resources and capabilities? And why do we care about that? | Threshold: What you need to be in the game Also called ‘qualifiers’ or ‘table stakes’ Distinctive: Resources and capabilities that others don’t have, unique, hard to acquire
Distinctive R&Cs are the basis of competitive advantage .
To compete the firm needs both ‘threshold’ and distinctive R&Cs. It is the distinctive R&C that create sustainable competitive advantage. |
| How can we evaluate if a capability provide a competitive advantage? | By using the VRIO framework. The 4 criteria by which capabilities provide a distinctive basis for achieving sustainable competitive advantage:
V - Value
Resources or capabilities are valuable when they enable a product or service that is valued by customers (at a cost that still allows an organisation to make profit).
R – Rare
Resources or capabilities are rare when possessed uniquely by one organisation or only by a few others. e.g. geo-located holdings; patented products; prime retail locations; special relationships with suppliers.
I - Inimitable
Resources and capabilities are inimitable when competitors find them difficult or costly to imitate, obtain or substitute. Resources (e.g. locations, raw materials) are more imitable than capabilities (the way resources are managed, developed, deployed integrated) . But capabilities are also acquirable, or imitable!
O - Organization
The ability to understand, support, leverage, facilitate, and exploit V-R-I advantage components. |
| What 3 ways can we classify firm resources? | Possible firm resources can be conveniently classified into three categories: physical capital resources (Williamson, 1975), human capital resources (Becker, 1964), and organizational capital resources (Tomer, 1987). |
| What is dynamic capabilities? | Dynamic Capabilities = an organization’s ability (‘O’ capability) to renew and recreate its resources and capabilities, to meet the needs of a changing environment.
Dynamic capabilities is the capability to update capabilities; to create, extend, modify current capabilities.
Ordinary ‘O’ capabilities are necessary to operate efficiently now; Dynamic ‘O’ capabilities are necessary to create competitive advantage in the future. Dynamic capabilities (ability to adapt to change and future) is part of O. |
| What is generic dynamic capabilities? | Sensing capabilities – constantly scanning and exploring new opportunities across markets and technologies (e.g. R&D and market research).
Seizing capabilities – addressing opportunities through new products, processes and activities.
Re-configuring capabilities – new products and processes may require renewal and re-configuration of capabilities and investment in new technologies. |
| How is the VRIO framework used to assess a competitive advantage and why is it a good forecaster for firm performance? | The VRIO framework assess wether not the capabilities are a sustained competitive advantage. If they are, that is a good indicator for how well the firm can compete in the market. |
| What is the value chain model? | The value chain describes the categories of activities which together over time create a product or service. Per Porter, the value chain consists of 5 primary activities, directly concerned with the creation or delivery of a product or service and 4 support activities, which help improve the effectiveness or efficiency of primary activities. Competitive advantage (or lack) can be analysed in any of these activities. |
| How can value chain model and VRIO framework be combined? | The value chain model can identify all parts of the business , and hence identify resources and capabilities. The VRIO framework can be used to evaluate if any of these are a sustained competitive advantage. |
| What is a SWOT model and where does resources and capabilities tie into this? | SWOT assess the following:
1. Strenghts and weaknesses (Resources and capabilities)
2. Opportunities and threats (External environment and industry future, macro-environment analysis)
After you have good view of OT, only then it is valid to think about SW in reference to these. “The aim is to identify which SW are relevant to and/or capable of dealing with changes taking place in the industry environment (OT)” p.7 |
| What are the dangers of the SWOT model? | Dangers in a SWOT analysis
1. Just “listing” OT without macro or industry foresight work (Chapter 2)
2. Not assessing SW in reference to OT
3. Over-generalisation: not getting to the heart of the S or W factor
4. Making SW lists with no prioritisation or scoring
5. Not identifying SW in relative terms, compared to competitors’ ability, or necessary (future) levels of resources and capabilities to address OT |
| What is the TOWS matrix and how does it tie into the SWOT analysis? | TOWS and SWOT are acronyms for different arrangements of the words: Strengths, Weaknesses, Opportunities and Threats. But, while SWOT tends to focus on brainstorming all points that fall under these four headings, TOWS takes it to the next step.
TOWS tries to generate a strategy based on what the SWOT model identified. |
