Chapter 3
Examining the Internal
Environment: Resources,
Capabilities, and Activities
2
OBJECTIVES
1
2
3
4
5
Explain the internal context of strategy
Identify a firm’s resources and capabilities and explain
their role in its performance
Define dynamic capabilities and explain their role in both
strategic change and a firm’s performance
Explain how value‑chain activities are related to firm
performance and competitive advantage
Explain the role of managers with respect to resources,
capabilities, and value‑chain activities
3
COMPARATIVE INDUSTRY REFORMANCE
How do
such differences in
profitability
materialize?
ROA
ROS
Grocery Store
Global Auto
Semiconducto
r
4
RESOURCES, CAPABILITIES, AND MANAGERIAL DECISIONS
Strategy
Competitive
advantage/
disadvantage
Management
strategic decision
making
Capabilities
Managers
Resources
Performance
5
RESOURCES AND CAPABILITIES: FUNDAMENTAL BUILDING
BLOCKS OF STRATEGY
The inputs that firms use to create goods
and services
• Undifferentiated or firms-specific
• Tangible or intangible
• Easy to acquire or difficult
A firm’s skill in using its resources
to create goods and services.
The combination of procedures
and expertise that the firm relies
on to engage in distinct activities
in the process of producing goods and
services
Capabilities
(competencies)
Resources
Strategy