TheInternalEnvironment:Resources, Capabilities,andCoreCompetencies

RESOURCES:inputsintoafirmsproductionprocess, suchascapitalequipment,theskillsofindividual employees,patents,finances,andtalentedmanagers.

CAPABILTIES:isthecapacityforasetofresourcesto performataskoranactivityinanintegrative manner.

CORECOMPETENCIES:resourcesandcapabilities thatserveasasourceofsustainedcompetitive advantageforafirmoveritsrivals.

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o Resources,capabilities,andcorecompetenciesprovidethe foundationofcompetitiveadvantage o Resourcesarebundledtocreateorganizational capabilities. o Capabilities,inturn,arethesourceofafirmscore competencies,whicharethebasisofcompetitive advantages

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VALUE
Byexploitingcorecompetenciesorcompetitive advantages firmscreatevalueforcustomers Valueismeasuredbyaproductsperformance characteristicsandbyitsattributesforwhich customersarewillingtopay

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Table4.1TangibleResources

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Table4.2IntangibleResources

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ToolsforBuildingCoreCompetencies

Sustainable Competitive Advantage

Value Chain Analysis

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Table4.4:TheFourCriteriaof SustainableCompetitiveAdvantage

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Definitions
Valuablecapabilities

Allowthefirmtoexploitopportunitiesto generaterevenuesand/orneutralizethreatsto reducecosts Thosecapabilitiespossessedbyfew,ifany, currentorpotentialcompetitors Capabilitiesthatotherfirmscannoteasily develop Capabilitiesthatdonothavestrategicequivalents

Firmshavethecorrectstructure,controlsystems,

Rarecapabilities

Costlytoimitatecapabilities Nonsubstitutablecapabilities Organizedtobeexploited

andrewardsystemstosupporteachsourceof competitiveparity,temporarycompetitive advantage,andsustainedcompetitiveadvantage

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Table4.5

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ValueChainAnalysis
Activities
Primaryactivities Involvedwithaproductsphysicalcreation,itssale anddistributiontobuyers,anditsserviceafterthesale

Supportactivities

Providetheassistancenecessaryfor theprimaryactivitiestotakeplace

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Figure4.4TheBasicValueChain

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Table4.6ExaminingtheValueCreating PotentialofPrimaryActivities

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Table4.7ExaminingtheValueCreating PotentialofSupportActivities

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Outsourcing

Outsourcingisthepurchaseofavaluecreating activityfromanexternalsupplier. Fourskillsareessentialformanagingoutsourcing:

strategicthinking dealmaking partnershipgovernance changemanagement

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