BUS 478 Chapter 5: Chapter 5 Analyzing Resources and Capabilities

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The role of resources and capabilities in strategy formulation: basing strategy on resources/capabilities. External environment has become more unstable; internal. Primary source of superior profits is competitive resources are a more secure base for formulating strategy advantage, not industry attractiveness. Technological/environmental changes have destroyed market leaders who were externally-focused and not focused on internal capabilities: resources and capabilities as sources of profit. Monopoly rents profits arising from market power. Ricardian rents those arising from superior resources. Resource-based view emphasizes the uniqueness of each company exploit a company"s differences and unique strengths. The resources of the firm: tangible resources. Motivation: these 3 types of resources combine to create organizational capabilities. Functional analysis capabilities in relation to functional areas in the firm (corporate, mis, r&d, operations, product design, marketing, sales/distribution: the nature of capability. Value-chain analysis primary vs. support activities. As things become routine, only then are they efficient/reliable. Single-task => specialized => activity-lreated => broad functional => cross-functional.

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