1) Four test that should be used to measure the competitive power of a company’s resource strengths are:
• Is the resource really competitively valuable? All companies possess a collection of resources and competencies; some have the potential to contribute to a competitive advantage, while others may not. • Is the resource strength rate, is it something rivals lack? Companies have to guard against prideful believe that their core competencies are distinctive competencies or that their brand name is more powerful than the brand names of rivals. • Is the resource strength hard to copy? The more difficult and the more expensive it is to imitate a company’s’ resource strength, the greater its potential competitive value. Resources tend to be difficult to copy, when they are unique, when they must be built over time, and when they carry big capital requirements. • Can the resource strength be trumped by substitute resource strengths and competitive capabilities? Resources that are competitively valuable, rare, and costly to imitate, lose their ability to offer competitive advantage if rivals possess equivalent substitute resources.
2) Rather than try to match the resources and capabilities possessed by a rival company, a company may develop entirely different resources and capabilities that substitute for the strengths of the rival.
3) Representative value chain for a Car Industry
Design (High Value Added) - After researching consumer wants and needs, automakers begin designing models which are tailored to the public demand.
Raw Materials (Low Value Added) - These include rubber, glass, steel, plastic, and aluminum. Over the past few years, the cost of raw materials has increased significantly, mostly due to the price increase of oil and natural rubber. Also, companies are now using aluminum and plastic in place of steel whenever possible in order to lessen the weight of the...