Exam 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Analyzing the internal environment enables a firm to determine what it might be able to do by identifying what opportunities exist.

Capabilities

If a firm has a service that is valuable, rare, and costly-to-imitate, but a substitute exists for the service, the firm will

According to the Opening Case, Apple's strong financial performance in poor economic times is largely credited to its innovation capabilities.

Any core competency has the potential to lose its value creating ability.

Primary activities are

A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive

A company can earn above-average returns only when the value it creates is less than the costs incurred to create that value.

____ of organizational decisions fail.

A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised

Given enough time, any firm's competitive advantage can be imitated by its competitors.

The executive leadership program at GE helped managers develop capabilities to deal with uncertainty, complexity, and intraorganizational conflict.

One criteria for a resource or capability to be a source of competitive advantage is that it allows the firm to perform a value-creating activity that competitors cannot perform.

Compared to tangible resources, intangible resources are ____ and ____.

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should

Outsourcing is the

Case Scenario : ERP Inc. ERPI is a leading provider of enterprise integration software (EIS). EIS allows a firm to connect and integrate processes across all aspects of its business, regardless of where they are located around the world. ERPI is a product-focused company, whereas most competitors in its market space, like Oracle, operate as "solutions companies." Oracle and Microsoft have begun to devote considerable resources to the development of and acquisition of products to compete in the EIS space. Despite these recent threats, one benefit of its product-focused strategy is that ERPI's proprietary product is generally recognized as being 200% to 300% better than competitors' software. ERPI estimates it will take 2 to 3 years for competitors to develop the capabilities needed to bring a competing product to market. ERPI invests a considerable percentage of its profits in basic R&D to support its core products. As evidence of this, among its competitors the firm maintains the largest in-house programming staff dedicated solely to the development of advanced enterprise integration software. Installation and related consulting for EIS typically cost between $100 and $200 million, with the ERPI software component accounting for about 20% of the installed cost (the remaining 80% is spent on the actual installation, not counting the value of the customer's time). ERPI's target market consists of the world's largest manufacturing and industrial firms and it currently enjoys a 60 percent market share. -(Refer to the above Case Scenario) Which of the following represents the maximum level of performance ERPI should expect to achieve?

Describe the importance of internal analysis to the strategic success of the firm.

Trademarks and copyrights are examples of a firm's tangible resources.

The foundation of many capabilities lies in the unique skills and knowledge of a firm's employees.