Chapter 4 – Leveraging Capabilities
Resource-based view is a leading perspective that suggests that firm
performance is fundamentally driven by differences in firm-specific
resources and capabilities
SWOT analysis is a tool for determining a firm’s strengths, weaknesses,
opportunities, and threats
Resources are the tangible and intangible assets a firm uses to choose and
implement its strategies
Capabilities are the tangible and intangible assets a firm uses to choose and
implement its strategies
Tangible resources and capabilities are assets that are observable and easily
quantified
o Financial
Ability to generate internal funds
Ability to raise external capital
o Physical
Location of plants, offices, and equipment
Access to raw materials and distribution channels
o Technological
Possession of patents, trademarks, copyrights, and trade
secrets
o Organizational
Formal planning, command, and control systems
Integrated management information systems
Intangible resources and capabilities are assets that are hard to observe and
difficult (if not impossible) to quantify
o Human
Managerial talents
Organizational culture
o Innovation
Research and development capabilities
Capacities for organizational innovation and change
o Reputational
Perceptions of product quality, durability, and reliability
Reputation as a good employer
Reputation as a socially responsible corporate citizen
Value chain is a series of activities used in the production of goods and
services that make a product or service more valuable
o Primary activities are input, R&D, components, final assembly,
marketing, and output
o Support activities are infrastructure, logistics, and human resources
Benchmarking is examining whether a firm has resources and capabilities to
perform a particular activity in a manner superior to competitors
Commoditization is a process of market competition through which unique
products that command high prices and high margins gradually lose their
ability to do so, thus becoming commodities
Resource-based view is a leading perspective that suggests that firm
performance is fundamentally driven by differences in firm-specific
resources and capabilities
SWOT analysis is a tool for determining a firm’s strengths, weaknesses,
opportunities, and threats
Resources are the tangible and intangible assets a firm uses to choose and
implement its strategies
Capabilities are the tangible and intangible assets a firm uses to choose and
implement its strategies
Tangible resources and capabilities are assets that are observable and easily
quantified
o Financial
Ability to generate internal funds
Ability to raise external capital
o Physical
Location of plants, offices, and equipment
Access to raw materials and distribution channels
o Technological
Possession of patents, trademarks, copyrights, and trade
secrets
o Organizational
Formal planning, command, and control systems
Integrated management information systems
Intangible resources and capabilities are assets that are hard to observe and
difficult (if not impossible) to quantify
o Human
Managerial talents
Organizational culture
o Innovation
Research and development capabilities
Capacities for organizational innovation and change
o Reputational
Perceptions of product quality, durability, and reliability
Reputation as a good employer
Reputation as a socially responsible corporate citizen
Value chain is a series of activities used in the production of goods and
services that make a product or service more valuable
o Primary activities are input, R&D, components, final assembly,
marketing, and output
o Support activities are infrastructure, logistics, and human resources
Benchmarking is examining whether a firm has resources and capabilities to
perform a particular activity in a manner superior to competitors
Commoditization is a process of market competition through which unique
products that command high prices and high margins gradually lose their
ability to do so, thus becoming commodities
