LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Define resources and capabilities.
2. Explain how value is created from a firm’s
resources and capabilities.
3. Articulate the difference between keeping an
activity in-house and outsourcing it.
4. Explain what a VRIO framework is.
5. Explain how to use a VRIO framework to
understand a firm’s resources and capabilities.
6. Identify three things you need to do (and one
thing you should avoid) as part of a successful
career and business strategy.
INTRO: SWOT ANALYSIS
Strengths and
Weaknesses – internal
assessment of the
organization leading to
management decisions.

Opportunities and
Threats – external
assessment of the
business environment to
identify the uncontrollable
events that might impact
management decisions.

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LO1: RESOURCES AND
CAPABILITIES

The tangible and intangible assets a firm uses

to choose and implement its strategies.

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LO2: THE VALUE CHAIN

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LO2: TWO-STAGE DECISION
MODEL

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LO3: LOCATION,
LOCATION, LOCATION

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LO4: VRIO FRAMEWORK

arity – how rare

are the
alue – do firm resources and
resources and capabilities?
capabilities add
value?

mitability – rganizational –
valuable and rare valuable, rare
resources provide and hard to
competitive imitate
advantage only if resources must
they are be well
inimitable. organized.

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LO5: USING A VRIO
FRAMEWORK
Resources and capabilities cannot be
evaluated in isolation.

The VRIO framework presents four

interconnected and increasingly difficult hurdles
for them to become a source of sustainable,
competitive advantage.
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DEBATE: OFFSHORING
FOR:
Value for firms in access to low-cost,
high quality labor.
Allows firms to focus on their core
capabilities.

AGAINST:
Offshoring nurtures rivals.
Negative impact on developed economies.
US firms not bound by American ethical
values.
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LO6: THINGS TO DO FOR
SUCCESS

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