Case #3: Cooking Up Trouble 1. What resources and capabilities did Martha Stewart living Omnimdeia appear to have prior to the trial and conviction? Have these resources and capabilities changed? Explain. * Martha Stewart living Omnimedia had powerful and trustworthy resources and the capabilities included: very extensive and specific merchandise lines that were advertised and sold in big distributors like Kmart and Sherwin Williams. This company had positioned its resources and capabilities well to exploit sociocultural and demographic trends. Now these capabilities have changed because these products were involved solely around Martha Stewart’s image. With her personal image being “stained” the company has a hard decision to …show more content…
Resources - Inputs into a firm’s production process such as capital equipment, skill of individual employees, patents, finance, and talented managers * Tangible Resources – Assets that can be seen and quantified * Intangible Resources – Family commitment, networks, organizational culture, reputation, intellectual property rights, trademarks, copyrights By themselves, resources do not create a strategic advantage for the firm. 2. Capabilities - can be defined as 1) organizational capabilities – the network of organizational routines and processes that determine how efficiently and effectively the organization transforms its inputs (resources) into outputs (products including physical goods and services) and 2) dynamic capabilities – an organizations ability to build, integrate and reconfigure capabilities to address rapidly changing environments. * Capacity to deploy resources that have been purposely integrated to achieve a desired end state. * Primary base for the firm’s capabilities is the skills and knowledge of its employees. * Just because the firm has a strong capacity for deploying resources does not mean it has a competitive advantage. 3. Core Competencies - * Resources and capabilities serve as a source of competitive advantage for a firm over its rival. * Not all resources and capabilities are core competencies. * Many suggest
On the other hands, competitive advantage is described as the advantages such as technology, human resources or any other elements that help the firm outperform their competitors (Burns, 2008). Competitive advantage is a dominant factor affecting the enterprise business, particularly the profit that the firm can gain. Combining these two terms together, it is clear that the more competitive advantage the company has in the long-term, the more success the firm can be in such a fierce international competitive
The ability of some firms to sustain longer term competitive advantage relates to their capabilities according to the resource based theory of the firm. Summarise this approach to explain why some firms perform better than others in an industry.
But on the other hand, there are distinctive capabilities, which should not just keep the company alive, but deliver a competitive
Capabilities: Schmitz (2012) refers to capabilities as “what the organization can do” to effectively utilize its resources. Some examples of Raytheon’s capabilities are Raytheon’s Six Sigma progress, integrated supply chain management, and a variety of technological capabilities. Raytheon’s Six Sigma is “a disciplined, knowledge-based approach designed to increase
3. Staffs have the access to the adequate business resources such as facilities, equipment and training, professional development to ensure they are equipped with the skills and knowledge to complete the
Technological resources are in the form of patents, copyrights or trade secrets (Grant, 2016). As well as intellectual capital, which is a value driver of a business (Chahal and Bakshi, 2016).
| Valuable resources which are also rare convey a competitive advantage, but its relative permanence is not assured. The
Porter (2004) refers to Competitive Advantage as at the heart of the firm’s performance in competitive markets. This perception is further developed by Stacey (2003) who places emphasis on strategic choice and the choice implemented by the firm as the main focal driver in order to secure competitive advantage for the organisation. Stacey (2003) adds to this by stating:
* Organizational capital: strategy supportive intangible assets such as leadership, alignment of goals, and teamwork
A firm has a competitive advantage when it implements a strategy competitors are unable to duplicate or find too costly to imitate (Ireland, Hoskisson and Hitt, 2011, p. 4).
Organizations gain a competitive advantage by utilizing their rare and valuable resources. These rare resources may either be tangible, such as machinery and equipment, intangible, for instance brand names, money, customer knowledge, or they may be in the form of human assets possessed by the organization. Ongoing capabilities, actions and prior investments of an organization are what give rise to resources. Moreover, resources may be relational, legal, reputational, physical, human or knowledge and informational.
Competitive advantage depends on the firms capabilities, which are linked to the firm’s resources. To stand apart and differentiate itself
III. CAPABILITY IS FORMED BY THE INTEGRATION OF RESOURCES Table I shows that competitive advantage is gained by the strategic deployment of some resources, capabilities, and/or competencies. Literature review suggests that concepts such as resources, capabilities, competencies, and core competencies are not clearly defined. We have found that only the resource itself is defined with a wide range of meanings. On one hand, resources are defined as “anything which could be thought of as a strength or weakness of a firm” [9]. This “anything” may include physical resources (e.g., raw materials, equipment, financial endowment, etc.), human resources (e.g., training, experience, skills, etc.), as well as organizational resources (e.g., firm image, process, routines, etc.) [4], [14]. Note that with this definition, capabilities are considered as part of resource. On the other hand, capabilities are not part of resource because of their dynamic “doing” nature. Many authors argue that capabilities are the result of resource deployment and organizational processes. Capabilities use resources and, therefore, are more dynamic and complex entity and should be treated independent to resources [15]. We feel more comfortable with Grant [5] definition who argues: “Resources are inputs into the
Capabilities mean how the company mixes and utilizes all assets to bring the best product offered. These capabilities summarize in company 4Ps, which are listed as below: