Barney SMCA4 03
Chapter 3
Evaluating a
Firm’s
Internal
Capabilities
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-1
Evaluating a Firm’s Internal Capabilities
What Does Internal Analysis Tell Us?
Internal analysis provides a comparative look at a firm’s capabilities
• what are the firm’s strengths?
• what are the firm’s weaknesses?
• how do these strengths & weaknesses compare to competitors?
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-2
Evaluating a Firm’s Internal Capabilities
Why Does Internal Analysis Matter?
Internal analysis helps a firm:
• determine if its resources and capabilities are likely sources of competitive advantage
• establish strategies that will exploit any sources of competitive advantage
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-3
Evaluating a Firm’s Internal Capabilities
The Theory Behind Internal Analysis
The Resource-Based View
• developed to answer the question: Why do some firms achieve better economic performance than others?
• used to help firms achieve competitive advantage and superior economic performance
• assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-4
Evaluating a Firm’s Internal Capabilities
The Resource-Based View
Resources and Capabilities
Resources:
• tangible and intangible assets of a firm
» tangible: factories, products intangible: reputation
• used to conceive of and implement strategies
Capabilities:
• a subset of resources that enable a firm to take full advantage of other resources
» marketing skill, cooperative relationships
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-5
Evaluating a Firm’s Internal Capabilities
The Resource-Based View
Resources and Capabilities
Firm Assets:
Are these resources or capabilities?
Machinery
?
Collective Product Design
Evaluating a
Firm’s
Internal
Capabilities
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-1
Evaluating a Firm’s Internal Capabilities
What Does Internal Analysis Tell Us?
Internal analysis provides a comparative look at a firm’s capabilities
• what are the firm’s strengths?
• what are the firm’s weaknesses?
• how do these strengths & weaknesses compare to competitors?
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-2
Evaluating a Firm’s Internal Capabilities
Why Does Internal Analysis Matter?
Internal analysis helps a firm:
• determine if its resources and capabilities are likely sources of competitive advantage
• establish strategies that will exploit any sources of competitive advantage
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-3
Evaluating a Firm’s Internal Capabilities
The Theory Behind Internal Analysis
The Resource-Based View
• developed to answer the question: Why do some firms achieve better economic performance than others?
• used to help firms achieve competitive advantage and superior economic performance
• assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-4
Evaluating a Firm’s Internal Capabilities
The Resource-Based View
Resources and Capabilities
Resources:
• tangible and intangible assets of a firm
» tangible: factories, products intangible: reputation
• used to conceive of and implement strategies
Capabilities:
• a subset of resources that enable a firm to take full advantage of other resources
» marketing skill, cooperative relationships
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
3-5
Evaluating a Firm’s Internal Capabilities
The Resource-Based View
Resources and Capabilities
Firm Assets:
Are these resources or capabilities?
Machinery
?
Collective Product Design