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BUS 800 Final: tb03

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Department
Business
Course
BUS 800
Professor
Phil Walsh
Semester
Winter

Description
CHAPTER 3 RESOURCES AND CAPABILITIES CHAPTER LEARNING OBJECTIVES 1. Appreciate the role of a firms resources and capabilities as a basis for formulating strategy. While the emphasis in Chapter 2 was on the external environment, this chapter highlights the importance of internal resources and capabilities. The interface between strategy and the firms internal environment is increasingly seen as important because the external environment is perceived to have become more unstable, and because research has indicated that competitive advantage rather than industry attractiveness is the primary source of superior profitability. 2. Identify and appraise the resources and capabilities of a firm. Resources are what the firm has or owns; capabilities are what the firm can do. Different ways of identifying and appraising resources and capabilities include functional and hierarchical classification schema and value chain analysis. 3. Evaluate the potential for a firms resources and capabilities to confer sustainable competitive advantage. The profitearning potential of a resource or capability depends on the extent to which it can be used to establish a competitive advantage. The key factors determining this potential are summarized in Figure 3.6. 4. Use the results of resource and capability analysis to formulate strategies that exploit internal strengths while defending against internal weaknesses. A stepbystep approach to appraising resources and capabilities is outlined in the chapter together with an illustrative example based on the Hyundai Motor Company. 5. Identify the means through which a firm can develop its resources and capabilities. While we know much about the ways in which firms develop or acquire new resources, our knowledge of the ways in which new capabilities are acquired and developed is much more limited. Firms may acquire capabilities through mergers, takeovers, or alliances, or they may choose to develop capabilities internally. 6. Recognize the difficulties that managers face in developing the resources and capabilities of the organization. Possibly the most difficult problem in developing capabilities is that we know little about the linkage between resources and capabilities. One observation that is confirmed repeatedly across very different fields of competitive endeavour is that capabilities are not simply an outcome of the resources upon which they are based. Copyright 2015 John Wiley Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited
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