Exam 5: Analyzing Resources and Capabilities

A strong brand is unlikely to be a source of sustainable competitive advantage since brands lack durability and can be purchased or created through advertising and promotion.

Enterprise Resource Planning software (such as that supplied by SAP) is unlikely, on its own, to be source of competitive advantage because:

For a resource or capability to be a source of competitive advantage, two conditions must be present: scarcity and relevance

"Organizational capability" and "organizational competence" refer to two concepts which, although related, are different.

Honda Motor Company, Microsoft, and 3M Corporation are examples of companies whose corporate strategies have been focused on satisfying a clearly defined customer need.

When a company has weaknesses relative to competitors among strategically important resources and capabilities, the appropriate strategic response is to:

Resources lack transferability between firms when:

Companies with the highest ratios of market value to book value tend to be those, either with valuable brands or valuable proprietary technologies.

The failure of Eastman Kodak points to the difficulties that companies face in acquiring the resources and capabilities needed to adapt to a radical technological change that transforms their core business.

When a firm's capabilities are based upon team effort rather than the skills of star employees the returns from those capabilities accrue to employees rather than to shareholders.

A bank is establishing a fixed income trading department.It is considering whether to hire a team of star traders or to invest a similar sum of money in developing a proprietary, automated trading system.The most valid reason for investing in the automated trading system in preference to hiring star traders is: