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

The corporate research division of Siemens files,on average,25 patents a day. The patents are a(n)

To build social capital whereby resources such as knowledge are transferred across organizations requires between the parties.

Why is it important to identify internal strengths and weaknesses?

Define capabilities and how they affect the firm's strategic success.

-------- is measured by a product's performance characteristics and its attributes for which customers are willing to pay

Capabilities may be costly to imitate if firms have unique and valuable organizational cultures,are causally ambiguous,and socially complex.

Case Scenario 1: Heartsong LLC. Heartsong LLC is a designer and manufacturer of replacement heart valves based in Peoria, Illinois. While a relatively small company in the medical devices field, it has established a worldwide reputation as the provider of choice high-quality, leading-edge artificial heart valves. Most of its products are sold to large regional hospital systems and research hospitals. Specialty heart centers are another emerging, but fast-growing, market for its valves. While Heartsong would like to grow quickly, its growth is constrained by the need to finance larger production runs and then carry this additional inventory. For products like those of Heartsong, vendors typically do not collect payment until the unit is actually used in surgery. Moreover, heart valves are usually required on short notice, which means that they must be either onsite, or inventoried at a nearby location. If nearby, then transport of the unit to a hospital or heart center occurs within a matter of hours, and sometimes minutes. For this reason, accelerated growth would require Heartsong to both finance increased production of its heart valves and carry increased levels of inventory that are in fact sitting on its customers' shelves. In fact, inventory-carrying cost is its single largest cost outside of research and development. While profitable growth is necessary if Heartsong is to continue extending its competitive advantage through increasingly greater investments in basic heart valve R&D, it is not clear that the company can internally support all these increased financial commitments (R&D, manufacturing, and inventory). Doc Watson, the CEO of Heartsong, is considering an outside contractor, EdFex, to handle the inventorying, warehousing, and delivery of its valves. EdFex has secure, high-tech warehouses in most major population centers around the country, and can ensure delivery of a product to these markets from its warehouses in less than one hour. -(Refer to Case Scenario 1). Why might an outsourcing arrangement with EdFex be attractive to Heartsong?

Capabilities

Which of the following is NOT an external event that reveals the "dark side" of core capabilities?

The need to meet quarterly earnings numbers disciplines managers to accurately examine the firm's internal organization.

Internal analysis enables a firm to determine what the firm

Subscriptions to the New York Times have been decreasing as more customers receive their news through other media. At the same time,advertisers have shifted portions of their spending to other media. The NYT's managers are making decisions under

At IBM,human capital is critical to forming and using the firm's capabilities in customer relationships,scientific and research skills,and technical skills in hardware,software,and services.

The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few young women know how to do fine tailoring,much less simple dressmaking. Many potential customers are unable to appreciate The premium quality of the fabrics and are deterred by the high prices,as well as the complexity of fine sewing. In the past,the store had a strong demand for fabrics,large classes for women learning the fine points of sewing,and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of

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

From a customer's point of view,for an organization's capability to be a core competence it must be

Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies?

The are those with the potential to be formed into core competencies as the foundation for creating value.

What are the differences between tangible and intangible resources? Which category of resources is more valuable to the firm?

Compared to tangible resources,intangible resources are