The Internal

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The internal environment: * Strategic competitiveness and above – Average returns result when Internal organization (What a firm can do : function of resources, capabilities, and core competencies) matches External environment ( What a firm might do : function of opportunities in the firm’s external environment → Competitive Advantage * Competitive advantage key points:

* No competitive advantage lasts forever.
* Over time, rival use their own unique resources, capabilities, and core competencies to duplicate the focal firm’s ability to create value for customers. * With globalization, sustainable competitive advantage is especially challenging. * Firms must exploit their current advantages while simultaneously using their resources and capabilities to form new advantages that can lead to future success. * Innovation and people are critical resources for organization in their quest for competitive advantage. * Analyzing the internal organization

* the context of internal analysis: Figure 3.1 Component of an internal analysis * Creating value: By innovatively bundling and leveraging their resources and capabilities by exploiting their core competencies or competitive advantages, firms creative value. Value is measured by: Product performance characteristics, Product attributes for which customers are… Above-average returns

* Resources, Capabilities and Core competencies
* Four specific criteria of sustainable competitive advantage capabilities that are : valuable, rare, Costly-to-imitate, Nonsubstitutable capabilities * Competitive consequences: focus on capabilities that yield competitive parity and either temporary or sustainable competitive advantage. * Performance implications include:

* Parity = average returns
* Temporary advantage = above avg.returns.
* Sustainable advantage = above average returns
* Value Chain Analysis:

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