Chapter 3

The Internal Environment:

Resources, Capabilities and
Core Competence
Strategic Inputs
Chapter 2
The External
The Strategic
Environment
Strategic Intent
Strategic Mission
Management
Chapter 3
The Internal
Environment
Process
Strategy Formulation Strategy Implementation
Chapter 5 Chapter 11
Chapter 4 Chapter 6 Chapter 10
Competitive Rivalry Organizational
Strategic Actions

Business-Level Corporate- Corporate

and Competitive Structure and
Strategy Level Strategy Governance
Dynamics Controls

Chapter 7
Chapter 8 Chapter 9 Chapter 12 Chapter 13
Acquisition and
International Cooperative Strategic Strategic
Restructuring
Strategy Strategy Leadership Entrepreneurship
Strategies
Strategic Outcomes

Strategic
Competitiveness
Above-Average
Returns
Feedback
 Sustainability of a Competitive
Advantage
• Sustainability of a competitive advantage is a
function of:
– the rate of core-competence obsolescence due to
environmental changes
– the availability of substitutes for the core competence
– the imitability of the core competence
 External and Internal Analyses
Environment By studying the external
Sociocultural environment, firms identify
mo eral
c

what they might choose to do

Ge
phi

Ec
Industry

n er c
n

ono
gra
Ge

Environment

al
mi
De

me al
Opportunities and threats
g
nt
/Le
En
Gl

Competitor
vir

cal
ob

Environment
on
al
on

l iti
v ir
me

Po
En

Technological
nt

General
 External
External and Internal
and Internal Analyses
Analyses
By studying the internal
environment, firms identify
what they can do

Unique resources,
capabilities, and core
competencies
(sustainable competitive
advantage)
 Three Conditions Affecting
Managerial Decisions About
Resources, Capabilities, and Core
Competencies
• Uncertainty regarding characteristics of the general
and the industry environments, competitors’ actions, and
customers’ preferences
• Complexity regarding the interrelated causes
shaping a firm’s environments and perceptions of the
environments
• Intraorganizational Conflicts among people
making managerial decisions and those affected by them
 Components of Strategic
Competitiveness
Internal Analysis
Competitive
Core Discovering Core Advantage
Competencies Competencies

Capabilities

Four Criteria Value

Resources of Sustainable Chain
• Tangible
• Intangible Advantages Analysis

• Valuable • Outsource
• Rare
• Costly to Imitate
• Nonsubstitutable