Intro to Management
Chapter 4 Notes
Evaluating a Company’s Resources, Capabilities, and Competitiveness
a) Internal analysis
1) How well is the company’s present strategy working?
- Indicators of how well a company’s strategy is working are whether company is
achieving stated financial and strategic objectives, whether its financial
performance is above the industry average, and whether it is gaining customers
and increasing its market share
2) What are the company’s competitively important resources and capabilities?
- A company’s resources and capabilities are its competitive assets and determine
whether its competitive power in the marketplace will be impressively strong or
- Resource and capability analysis provides managers with powerful tools for
sizing up the company’s competitive assets and determining whether they can
provide the foundation necessary for competitive success in the marketplace –
two step process: identify the resources and capabilities, and then figure out
which are competitively most important and do four tests of resource’s
- a resource is a productive input or competitive asset that is owned or controlled
by the firm
- a capability is the capacity of a firm to perform some internal activity competently;
organizational capabilities are developed and enabled through the deployment of
a company’s resources or some combination of its resources
- resources fall into two categories: tangible and intangible. Tangible resources are
those that can be touched or quantified readily; intangible resources include
human assets and intellectual capital, as well as brands, images, reputation etc.
- A resource bundle is a linked and closely integrated set of competitive assets
centered around one of more cross functional capabilities
- The Four Tests of a Resource’s Competitive Power: VRIN – is the resource
valuable, rare, inimitable (hard to copy), and nonsubstitutable?
- A company requires a dynamically evolving portfolio of resources and capabilities
to sustain its competitiveness and help drive improvements in its performance - A dynamic capability is the ability to modify, deepen, or augment the company’s
existing resources and capabilities
3) Is the company able to seize market opportunities and nullify external threats?
- SWOT analysis: Strengths and Weaknesses, market Opportunities, and external
- Basing a company’s strategy on its most competitively valuable strengths gives
the company its best chance for market success
- Competence is having a true capability – you can perform something cons