Chapter 3 - The internal organization: resources, capabilities, core competencies and competitive advantages. Studying this chapter should provide you with the strategic management knowledge needed to: Explain the importance of analyzing and understanding the firm’s external environment, define and describe the general environment and the industry environment, discuss the four activities of the external environmental analysis process,. | Chapter 3: The Internal Organization: Resources, Capabilities, Core Competencies and Competitive Advantages Overview: Importance of understanding internal organization Value: Definition and importance Tangible vs. intangible resources Capabilities: Definition and development Core competencies: Four criteria of sustainable competitive advantage Value Chain Analysis Outsourcing: Definition and “why?” Importance of internal organization assessment Analyzing the Internal Organization Context of Internal Analysis Analyze firm’s portfolio of resources and the bundles of heterogeneous resources and capabilities managers have created Understand how to leverage these bundles An organization's core competencies creates and sustains its competitive advantage Creating Value Exploit core competencies or competitive advantage Value: measured by a product's performance characteristics and by its attributes for which customers are willing to pay Analyzing the Internal Organization . | Chapter 3: The Internal Organization: Resources, Capabilities, Core Competencies and Competitive Advantages Overview: Importance of understanding internal organization Value: Definition and importance Tangible vs. intangible resources Capabilities: Definition and development Core competencies: Four criteria of sustainable competitive advantage Value Chain Analysis Outsourcing: Definition and “why?” Importance of internal organization assessment Analyzing the Internal Organization Context of Internal Analysis Analyze firm’s portfolio of resources and the bundles of heterogeneous resources and capabilities managers have created Understand how to leverage these bundles An organization's core competencies creates and sustains its competitive advantage Creating Value Exploit core competencies or competitive advantage Value: measured by a product's performance characteristics and by its attributes for which customers are willing to pay Analyzing the Internal Organization (IO) Challenge of Internal Analysis Strategic decisions are non-routine, have ethical implications and influence the organization’s above-average returns Involves identifying, developing, deploying and protecting firms’ resources, capabilities and core competencies Requires strategic thinking, making judgments, and taking intelligent risks Managers face uncertainty, complexity, and interorganizational conflict when making decisions about resources, capabilities, and core competencies Analyzing the Internal Organization (IO) Resource and Capability Analysis A tool used for sizing up the company’s competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace 2 Step Process Identify company’s resources and capabilities Closely examine resources and capabilities to determine which are the most competitively important and whether they can support a sustainable competitive advantage over rivals Figure .
