Презентация на тему Chapter 3. Evaluating a Firm’s Internal Capabilities

a comparative look at
a firm’s capabilities.
• What are

• What are the firm’s weaknesses?

• How do these strengths and weaknesses compare
to competitors?

exploit any sources
of competitive advantage
• determine if its resources and

Internal analysis helps a firm:

answer the question: Why do some
firms achieve better

• assumes that a firm’s resources and capabilities
are the primary drivers of competitive advantage
and economic performance

• used to help firms achieve competitive advantage
and superior economic performance

of a firm
» tangible: factories, products intangible: reputation
• used

Capabilities:

• a subset of resources that enable a firm to
take full advantage of other resources
» marketing skill, cooperative relationships

Skill
Recruiting Skill
Engineering Skill of Individuals
Mineral Deposits
Are these resources
or capabilities?
?
?
?
?
?

earnings)
• Physical (plant and equipment, geographic location)
• Human (skills and abilities

• Organizational (reporting structures, relationships)

Heterogeneity
» Different firms may have different resources.
• Resource Immobility
» It may be

» Some resources may not spread from firm to
firm easily.

one firm has resources that are valuable
and other firms

• if other firms can’t imitate these resources
without incurring high costs, then…

• the firm possessing the valuable resources
will likely gain a sustained competitive advantage

the
result of “bundling” the resources and capabilities
of a

Resource Heterogeneity

• Managers of a firm could take resources that seem
homogeneous and “bundle” them to create
heterogeneous combinations.

• Competitive advantage typically stems from several
resources and capabilities “bundled” together.

are:
• valuable,
• rare, and
• costly to imitate, and…
• the firm is organized to

then the firm can expect to enjoy a sustained
competitive advantage.

is subjected to
each question to determine the competitive
implication of

Applying the Tool

• Each question is considered in a comparative
sense (competitive environment).

Does the resource enable the firm
to exploit an external

• The practical: Does the resource result in an
increase in revenues, a decrease in costs, or
some combination of the two? (Levi’s reputation
allows it to charge a premium for its Docker’s pants)

must be rare enough that perfect
competition has not

• If a resource is not rare, then perfect competition
dynamics are likely to be observed (i.e., no
competitive advantage, no above normal profits).

• Thus, there may be other firms that possess the
resource, but still few enough that there is scarcity
(several pharmaceuticals sell cholesterol-lowering
drugs, but the drugs are still scarce—look at prices).

resources are:
The firm can expect:
Not Valuable
Competitive Disadvantage
Valuable, but Not

Competitive Parity

Valuable and Rare

Competitive Advantage
(at least temporarily)

competitive advantage of valuable
and rare resources can be sustained

» Intangible resources are usually more
costly to imitate than tangible resources.
(Harley-Davidson’s styles may be easily
imitated, but its reputation cannot.)

are high costs of imitation, then the firm
may enjoy

» A sustained competitive advantage will last
only until a duplicate or substitute emerges.

If a firm has a competitive advantage, others
will attempt to imitate it. (Razor scooters
were a big hit and others quickly imitated them.)

Imitation
Unique Historical Conditions (Caterpillar)
• first mover advantages
• path dependence

Imitation
Causal Ambiguity (Southwest Airlines: HR)
• Causal links between resources and

• Bundles of resources fog these causal
links.

Imitation
Social Complexity (WordPerfect)
• The social relationships entailed in
resources may

Imitation
Patents
• Patents may be a two-edged sword.
• Offer a period of

• Required disclosure may actually decrease
the cost of imitation, and the timing.

firm’s resources are:
The firm can expect:
Valuable, Rare, but
not Costly

Temporary
Competitive Advantage

Valuable, Rare, and
Costly to Imitate

Sustained
Competitive Advantage
(if Organized appropriately)

structure and control mechanisms
must be aligned so as to

• Examples: formal and informal reporting structures,
management controls, compensation policies,
relationships, and so on

• These structure and control mechanisms complement
other firm resources—taken together, they can help a
firm achieve sustained competitive advantage.
(3M Company)

and actions of firms in
response to the strategic decisions

No Response

Change Tactics

Change Strategy

market
A firm may decide to take no action because:
• a

• it does not have the resources and capabilities
to mount an effective response

• it wants to reduce or manage rivalry in the
market through tacit collusion

so
quickly that there is
no advantage
• a “leap frog” move
may create

• a fundamental change
in a firm’s theory

• may be necessary if
current strategy
becomes obsolete

• a mimetic change may
achieve parity, but not
advantage

should use resources and capabilities to fill
unique competitive space.
Customer
Needs
Competitor
Offerings











Price
Quality

Focal

firms can achieve competitive advantage even
if they are second

Customer
Needs

Competitor
Offerings

Price

Quality

Focal Firm
Offering

» higher quality/
lower cost
offering may
lead to advantage

and capabilities).
» Firms may be different (heterogeneity).
» Differences may be enduring

• Competitive advantage stems from resources
and capabilities that meet the VRIO criteria.

be sustained if:
• other firms’ costs of
imitation are greater
than

• the firm is organized
to exploit advantages

advantage
Internal Analysis
Tells us:
• what the firm should do, given the

VRIO Framework Helps Managers Recognize
Sources of Competitive Advantage