Spring 2009

Objective of analysing a business is .... to identify its resources and explore

how these resources are used to contribute to its competitive advantage.

Resources Configuration of resources The resource audit

VRIO !

The Question of Value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?"

The Question of Rarity: "Is control of the resource/capability in the hands of a relative few?"

The Question of Imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?"

The Question of Organization: "Is the firm organized, ready, and able to exploit the resource/capability"?

Political, Economical, Social and technologicalIt exposes many of the possible external environmental influences on a business’s performance

Core activities Other activities

In the context of a business plan, ask whether some of the planned activities are really core, particularly if investment is required to perform them. Funding is always scarce.

These activities are usually outsourced

The overlapping of organisational core competencies and core activities comes about because a business should focus on the activities at which it is most competent

i.e. a group of investment bankers setting up a new specialist investment bank maybe excellent bankers, but they may have little knowledge of running an office, or payroll and it systems. They may decide to outsource these non-core activities and concentrate on doing what they are most competent at: the business of investment banking.

If a business’s core activity is closely aligned with its core competencies,

these become a factor that enables it to achieve competitive advantage. In contrast, non-core activities cannot

leverage core competencies...

Next: Configuration of resources