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Unique, deeply embedded, firm-specific strengths that allow companies to differentiate their products and services and thus create more value for customers than their rivals, or offer products and services of acceptable value at lower cost
Core competencies
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Assets that a company can draw on when crafting and executing strategy
Resources
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The organizational and managerial skills necessary to orchestrate a diverse set of resources to deploy them strategically
Capabilities
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Distinct and fine-grained business processes that enable firms to add incremental value by transforming input into goods and services
Activities
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Resources that have physical attributes and are visible
Tangible resources
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Resources that have no physical attributes and are invisible
Intangible resources
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Competitive advantage ismore likely to be based on
intangible resources
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The assumption behind resource-based view that assumes hundles of resources, capabilities and competencies idffere across firms. Resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another
Resources heterogenity
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The assumption behind resource-based view that assumes that resources tend to be "sticky" and don't move easily from firm to firm. Resource differences that exist between firms are difficult to replicate and, therefore, can last for a long time
Resource immobility
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What are VRIO attribues
- For a firm's resources to be the basis of a competitive advante it must be
- Valuable
- Rare
- Costly to imitate
- Organized in a way to capture the value of the resource
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A resource is valueable if...
it allows the firms to take advantage of an external opportunity and/or neutralize an external threat
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A resources is rare if
The number of firms that possess it is less than the number of firms it would require to reach a state of perfection
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A resource is costly to imimate if
Firms that do not possess the resources are unable to develop or buy the resource at a comparable cost
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The firm is organized to capture the value of the resource if
It has an effective organizational strucutre, prossess, and systems in place to fully exploit the compettive potential
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What are the barriers to immitation
- Better expectations of future resource value (or simply luck)
- Path Dependence
- Casual ambiguity
- Social Complexity
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These allow a firm to create, deploy, modify, reconfigure, or upgrade its resource base to gain and sustain competitive advantage in a constaly changing environment
Dynamic capabilities
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To sustain a competitive advantage, any fit between a firm's internal strength and the external environment must be
dynamic
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Describes the internal acitivities a firm engages in when transforming inputs into outputs
Value chain
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Each activity the firm performs along the horizontal chain adds
Incremental value and incremental costs
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When a firm's set of distinct activities is able to generate value greater than the costs to create it, the firm obtains a
Profit margin
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A situation in which the cause and effect of a phenomenon are not readily apparent
Casual ambiguity
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Barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy
Isolating mechanisms
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A situation in which the options one faces in the current situation are limited by decisions made in the past
Path dependence
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Firm activiites that add value directly by transforming in puts into outputs as the firm moves a product or service horizontally along the internal value chain
Primary activities
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A situation in which different social and business systems interact with one another
Social complexity
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Research & Developmentinformation systemsHuman Resources Account & FinanceFirm Infrastrucutre, incl. processess, policies & procedures
Support activities
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Supply Chain Management
Operations
Distribution
Marketing & Sales
After-sales service
Primary activities
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