Show Name: Class: Date: Chapter 03: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages True / False 1. Technology has made it more difficult for companies to find ways to develop competitive advantages. a. True b. False ANSWER: True 2. Firms should seek to continually develop new core competencies because all core competencies guarantee above- average profit. a. True b. False ANSWER: False 3. In today's global economy, some resources that were traditionally critical to firms' efforts to produce, sell, and distribute goods are now less likely to be a source of competitive advantage. a. True b. False ANSWER: True 4. Firms achieve strategic competitiveness and earn above-average returns by acquiring, bundling, and leveraging their resources for the purpose of taking advantage of opportunities in the external environment in ways that create value for customers. a. True b. False ANSWER: True 5. Analyzing the internal environment enables a firm to determine what it MIGHT DO by identifying what opportunities and threats exist. a. True b. False ANSWER: False 6. Analyzing the internal environment enables a firm to determine what it CAN DO by identifying resources, capabilities, and core competencies in the internal organization. a. True b. False ANSWER: True 7. Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization. a. True b. False ANSWER: True 8. The best way to understand the relationship between resources, capabilities, and core competencies is to recognize that Copyright Cengage Learning. Powered by Cognero.Page 1 See Also: Core Competencies DefinitionThe core competencies definition is a resource or capability that gives a firm competitive advantage. Core competencies are the business functions or operational activities that a company does best. A company’s core competencies are what differentiate it from the other competitors in its industry. They are also the resources and capabilities that allow the company to achieve profitability. A firm should devise its strategy so as to exploit the resources and capabilities that comprise its core competencies. ResourcesA company’s resources are the operational inputs that allow it to perform its business activities. Resources are often divided into three categories, including the following:
Resources can also be classified as either tangible resources or intangible resources. Tangible resources are physical assets, such as equipment or property. Intangible resources are non-physical assets, such as reputation, brand equity, or superior organizational architecture. Resources become core competencies or contribute to core competencies when they meet the criteria outlined below. CapabilitiesA company’s capabilities are the activities and functions it performs to utilize its resources in an integrative fashion. Capabilities are practiced and honed over time. As they become stronger, the
company enhances its expertise in a particular functional or operational area. This expertise allows the company to differentiate itself from competitors. Furthermore, capabilities are operational activities that the
company has mastered. They are inimitable or difficult for competitors to figure out and replicate. When capabilities meet the criteria outlined below, they contribute to the company’s competitive advantage and
profit potential, and are considered core competencies. Core Competencies CriteriaWhen a company’s resources or capabilities meet certain criteria they can be called core competencies. If a resource or capability meets the following criteria it
contributes to a firm’s competitive advantage over industry rivals and allows the firm to achieve profitability. A resource or capability is a core competency if it is valuable, rare, costly to imitate, and
non-substitutable. [box]Strategic CFO Lab Member Extra Access your Exit Strategy Checklist Execution Plan in SCFO Lab. The step-by-step plan to put together your exit strategy and maximize the amount of value you get. Click here to access your Execution Plan. Not a Lab Member? Source: Harrison, Jeffrey S., Michael A. Hitt, Robert E. Hoskisson, R. Duane Ireland. (2008) “Competing for Advantage”, Thomson South-Western, United States, 2008. Why core competencies are considered as the sources of competitive advantage?Developing core competencies enables organizations to gain a competitive advantage with the express benefit of increasing sales and profits. Companies achieve this through innovation in developing products and services.
What are the differences between resources and core competencies?Resources are a business's assets, capabilities are the ability to exploit its resources, and competency is a cross-functional integration and coordination of capabilities.
Are core capabilities tangible?They can be tangible, like a business process that is automated, but most of them tend to be tacit and intangible. Critical to forming competitive advantages, capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital.
What are tangible competencies?1. In addition to soft skills, there are other, more tangible skills that most projects require. These are called hard skills or technical skills. They are the specific knowledge and abilities required to do the job. Examples of hard skills include computer coding, equipment operation, and painting.
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