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Chapter 3

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COMM 315
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Chapter 3 The Internal Organization Resources Capabilities Core Competencies and Competitive AdvantagesFirms achieve strategic competitiveness and earn aboveaverage returns when their unique core competencies are effectively acquired bundled and leveraged to take advantage of opportunities in the external environmentIn general the sustainability of a competitive advantage is a function of three factors 1 the rate of core competence obsolescence because of environmental changes 2 the availability of substitutes for the core competence and 3 the imitability of the core competence Matching what a firm can do a function of its resources capabilities core competencies and competitive advantages with what it might do a function of opportunities and threats in the external environment allows the firm to develop vision pursue its mission and select and implement its strategies Resources and capabilities are not inherently valuable but they create value when the firm can use them to perform certain activities that result in a competitive advantage AAnalyzing the Internal Organization1The context of Internal AnalysisIncreasingly those who analyze the firms internal organizational should use a global mindset to do soA global mindset is the ability to analyze understand and manage an internal organization in ways that are not dependent on the assumptions of a single country culture or contextAnalysis of the firms internal organization requires that evaluators examine the firms portfolio of resources and the bundles of heterogeneous resources and capabilities manager have created Understanding how to leverage the firms unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal Organization See figure 31 difficult managerial2Creating ValueBy exploiting their core competencies to meet if not exceed the demanding standards of global competition firms create value for customersValue is measured by a products performance characteristics and by its attributes for which customers are willing to pay Firms with a competitive advantage offer value to customers that is superior to the value competitors provideFirms create value by innovatively bundling and leveraging their resources and capabilitiesCore competencies in combination with productmarket positions are the firms most important sources of competitive advantageThe core competencies of a firm in addition to results of analyses of its general industry and competitor environments should drive its selection of strategies 3The Challenge of Analyzing the Internal OrganizationDifficult managerial decisions concerning resources capabilities and core competencies are characterized by three conditions uncertainty complexity and intraorganizational conflictsUncertaintyRegarding characteristics of the general and industry environments competitors actions and customer preferencesComplexityRegarding the interrelated causes shaping a firms environments and perceptions of the environmentsIntraorganizaitonal ConflictsAmong people making managerial decisions and those affected by them
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