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Internal Environment ​ Resources → Capabilities → Competencies ○​ Resources are the primary building blocks of an organization. ​ Two basic categories ​ Tangible resources: Assets that can be observed or quantified...

Internal Environment ​ Resources → Capabilities → Competencies ○​ Resources are the primary building blocks of an organization. ​ Two basic categories ​ Tangible resources: Assets that can be observed or quantified ○​ Financial resources – Cash reserves, lines of credit, revenue streams ○​ Physical resources – Manufacturing plants, equipment, office buildings ○​ Technological resources – Patents, production machinery, software systems ○​ Organizational resources – Formal reporting structures, IT infrastructure ​ Intangible resources: Assets that are rooted deeply in the firm’s history, usually ties to its people, take a longer time to develop, and are more difficult for other companies to imitate. ○​ Human resources – Employee expertise, leadership capabilities, company culture ○​ Reputation – Brand recognition, customer loyalty, goodwill ○​ Innovative resources – Proprietary knowledge, R&D capabilities, trade secrets ○​ Relational resources – Business networks, supplier relationships, strategic alliances ○​ Capability: The ability to combine resources, tangible and/or intangible, to create something that is valuable to the organization ​ Analogy Ex: Assume you lived 5,000 years ago, and you need to hunt to survive. You learned that there is a flint nearby that can be chipped into a sharp edge, certain tree limbs that were straight and strong, feathers from birds on the ground, and certain plants that could produce strong flexible cordage. By themselves there are simply raw materials. However, when you combine these physical assets with the intangible skill of knowing how to turn them into a workable bow and set of arrows, you can now vastly improve your ability to hunt and survive. ○​ Organizational Competencies: “Which of the following are the four basic types of competencies” ​ Four basic types of competencies: ​ Incompetencies: You are not very good at something important. As a result, your organization could be seriously harmed quickly - you can die quickly (Can lead to Rapid Failure) ​ Deficiencies: You’re good or okay at something, but as least one competitor is noticeably better at it (Can lead to Competitive Disadvantage)  ​ Core competencies: You’re good at something, and no other competitors are any better than you are at it (Can lead to Competitive Parity) ​ Distinctive competencies: You’re good at something, and you do it better than all your competitors (Can lead to Competitive Advantage) ​ Competitive parity = average economic returns; Competitive disadvantage = below average economic returns; Competitive advantage = above average economic returns ​ VRIS Framework (Jay Barney): ○​ Valuable: Economic returns above minimum risk-adjusted average expectations of investors ○​ Rare: Unique, distinctive (not just ‘core’ competency) ○​ Imitability: Difficulty and/or costliness or imitating/copying ○​ Substitutable: Similar to Porter’s FIve Forces Model concept regarding substitute products/services. ○​ ​ Substitutes are not in the same industry, they are competitors. (Substitutes: royal caribbean cruise and vegas) (Competitors: Delta and American Airlines) ​ Value Chain (Michael Porter): The sequential steps involved in producing goods (and services) ○​ You will hear the terms “upstream” and “Downstream” out in the workplace. These relate to your position on the value chain. ​ Upstream is the raw materials and suppliers. ​ Downstream is the buyers and their buyers, ○​ Workplace example: You will hear terms like process reengineering, process mapping, etc. ○​ A company may choose to be in any one step of the industry value chain or in multiple steps. ○​ Support Activities: Finance, HR, Leasing / Real Estate Mgt., Information systems, Risk Management, contract management, G&A Services.