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Chapter 3

The document defines key terms related to a firm's internal capabilities and resources. It then provides review questions about analyzing a firm's internal organization and identifying strengths/weaknesses. Specifically, it discusses the importance of understanding tangible and intangible resources, how firms create valuable capabilities, and the criteria those capabilities must meet to become core competencies. The questions also cover value chain analysis, outsourcing, and how core competencies could become rigidities if overrelied on.

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Mariya Bhaves
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217 views5 pages

Chapter 3

The document defines key terms related to a firm's internal capabilities and resources. It then provides review questions about analyzing a firm's internal organization and identifying strengths/weaknesses. Specifically, it discusses the importance of understanding tangible and intangible resources, how firms create valuable capabilities, and the criteria those capabilities must meet to become core competencies. The questions also cover value chain analysis, outsourcing, and how core competencies could become rigidities if overrelied on.

Uploaded by

Mariya Bhaves
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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OANDASAN, JAYJAY S.

BSBA-FMA III

KEY TERMS

1.Costly-to-imitate capabilities -> are capabilities that other firms cannot easily
perform.

2.Global mind-set-> is the ability to analyze, understand and manage an internal


organization in ways that are not dependent on the assumption of a single
country, culture or context.

3.Intangible resources-> are assets that are rooted deeply in the firms history,
accumulate overtime and are relatively difficult for competitors to analyze and
imitate.

4.Nonsubstitutable capabilities-> are capabilities that do not have strategic


equivalents.

5.Outsourcing-> is the purchase of value creating activity or support function


from a external supplier.

6.Rare capabilities-> are capabilities that few if any competitors possess.

8.Support functions-> include the activities or tasks the form completes in order
to support the work being done to produce well distribute and serve the products
the firm is producing.

9.Tangible resources-> are assets that can be observed and quantified.

10.Value-> is measured by a product's performance characteristics and by its


attributes for which costumers are willing to pay.

11.Valuable capabilities-> allow the firm to exploit opportunities or neutralize


threats in its external environment.
12.Value chain activities-> are activities or tasks the firm completes in order to
produce products and then sell, distribute and service those products in ways that
create value for costumers.

REVIEW QUESTIONS

1.Why is it important for a firm to study and understand its internal


organization?
-> It is important for a firm to study and understand its internal organization
because they will become more aware of what is happening to the organization
and to the market and also formulate ideas on how to make its business gain
more profit.

2.What is Value? Why is it critical for the firm to create value? How does it do
so?
-> Value is measured by a product's performance characteristics and by its
attributes for which costumers are willing to pay. By innovatively bundling and
leveraging their resources to form capabilities and core competencies.

3.What are the differences between tangible and intangible rescores? Why is it
important for decision makers to understand these differences? Are tangible
resources more valuable for creating capabilities than are intangible resources,
or is the reverse true? Why?
->When we say tangible resources this are resources that can be observed by our
five senses while intangible resources are something that can’t be seen or
touched. Intangible resources doesn’t exist physically though they still have value.
It is important for decision makers to understand the differences of these two
resources because these resources can help for the success of the firm if it use
correctly. Intangible resources are more valuable for creating capabilities. Why?
Because if all the workers or staff have a good team work it is possible to create
better output. In fact we all know that tangible resources are useless without a
good teamwork.
4.What are capabilities? How do firms create capabilities?
-> Capabilities are the ability to perform or achieve certain actions or outcomes.
Firms create capabilities by combining tangible and intangible resources.

5.What four criteria must capabilities satisfy for them to become core
competencies? Why is important for firms to use these criteria to evaluate their
capabilities value creating potential?
-> The four criteria are valuable capabilities, rare capabilities, costly to imitate
capabilities and nonsubstitutable capabilities. It is important for firms to use these
criteria because these are the keys to understand more on what is happening on
the market and in the business.

6.What is value chain analysis? What does the firm gain by successfully using
this tool?
-> Value chain activities are activities or tasks the firm completes in order to
produce products and then sell, distribute and service those products in ways that
create value for costumers. If the firm successfully use this tool they will gain
more income.

7.What is outsourcing? Why do firms outsource? Will outsourcing's importance


grow in the future? If so Why?
-> Outsourcing is the purchase of value creating activity or support function from
a external supplier. Firms do outsourcing in order for them to increase their
flexibility, mitigate risks and reduce their capital investments. Yes! Because
outsourcing helps a lot to firms and can affect a wide range of jobs, ranging from
customer support to manufacturing to the back office.

8.How do firms identify internal strengths and weaknesses? Why is it Vital that
managers have a clear understanding of their firms strengths and weaknesses?
-> Firms identify internal strengths and weaknesses by analyzing its internal
organization. It is vital to managers to clearly understand its strengths and
weaknesses because through this they will know what part needs for
improvement.
9.What are core rigidities ?what does it mean to say that each core competence
could become a core rigidity?
-> Core rigidities are flip side of core competencies, and caused by
overreliance on any advantage(s) for too long. While a successful
firm's management relaxes its improvement efforts, others keep on getting
better and obsolete its competitive advantage. Core competence could
become a core rigidity when its core competencies already practice by other
firms.

CASE DISCUSSION QUESTIONS

1.What influences from the external environment over the next several years do
you think might affect the way Zara competes?
-> Zara uses its resources and capabilities that serves as a potential as the
foundation for core competencies that serves as a potential source of competitive
advantage over its rivals and understanding its internal organization.

2.How easy or difficult do you think it would be for competitors to imitate


Zara’s supply chain as a capability?
-> Zara's supply chain is also managed much more efficiently than those other
companies.

3.Is getting products to costumers as quickly as possible an outcome that you


believe would create value in industries in addition to clothing? If so, which
industries and why?
->Yes because the customers will be satisfied if your products will be delivered
quickly. As Zara’s did. They call it “Fast fashion” wherein they give customers what
they want and get it to them faster that anyone else.

4.What value does Zara create for its customers?


-> Zara create value for its good capabilities for making and maintaining good
quality of products by owning its own operating dyeing plant for cloth giving its
significant control over its products. And ability to give their gaster for what their
customers wants.
5.As you study how Zara competes and the capabilities it uses to do so are
there areas of the firms operations you believe might be candidates for
outsourcing? If so, what areas and why might those be outsourced in the
future?
-> No longer needed for outsourcing because Zara already have all the qualities
needed for a successful company.

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