These are the “building blocks” or assets a firm can draw on.
RESOURCES
Physical assets that are visible and quantifiable (e.g., cash, buildings, machinery, inventory).
Tangible Resources
Assets that have no physical substance but are often more valuable
Intangible Resources
(e.g., brand reputation, intellectual property/patents, company culture, and employee “know-how”).
Intangible Resources
These are the “verbs” of the organization.
Capabilities
They represent the firm’s ability to bundle, manage, and deploy resources strategically.
Capabilities
It is an organizational routine or process.
Capabilities
These are unique strengths, embedded deep within a firm, that allow it to differentiate its products/services from rivals.
Core Competencies
They are the result of a specific interplay between resources and capabilities.
Core Competencies
is the primary tool used to evaluate if a specific resource or capability is a source of Sustained Competitive Advantage (SCA).
THE VRIO FRAMEWORK
Does it help the firm exploit an opportunity or neutralize a threat?
VALUABLE
Is it currently possessed by only a few (if any) competitors?
RARE
Is it costly or difficult for others to copy or substitute?
IMITABLE
Is the firm’s structure/process designed to capture this value?
ORGANIZED
STRATEGIC IMPLICATION IF “NO”
VALUABLE?
RARE?
IMITABLE?
ORGANIZED?
Competitive Disadvantage
Competitive Parity (Normal)
Temporary Advantage
Unused Advantage
It breaks the firm down into a chain of discrete activities to see where value is added and where costs are incurred.
Value Chain Analysis
These are directly involved in the physical creation of the product, its sale, and transfer to the buyer:
PRIMARY ACTIVITIES
PRIMARY ACTIVITIES
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Receiving, storing, and distributing inputs (e.g., raw materials).
Inbound Logistics
Transforming inputs into the final product (e.g., manufacturing).
Operations
Collecting, storing, and distributing the product to buyers.
Outbound Logistics
Activities used to induce buyers to purchase (e.g., advertising, pricing).
Marketing & Sales
: Enhancing or maintaining the value of the product (e.g., installation, repair).
Service
These provide the “infrastructure” that allows primary activities to take place:
SUPPORT ACTIVITIES
