RESOURCES, CAPABILITIES AND CORE COMPETENCIES

Resources are bundled to create

organizational capabilities;
capabilities are source of firm’s
core
competencies, which is basis of
establishing competitive
advantages
Resources are bundled to create organizational capabilities; then, capabilities will serve
as a source of firm’s core competencies, which is basis of establishing competitive
advantages

Resources

 Are the source of a firm’s capabilities.

 Alone, do not yield a competitive advantage.
 Are a firm’s assets, including people and the value of its brand name.
 Represent inputs into a firm’s production process, such as:
o Capital equipment
o Skills of employees
o Brand names
o Financial resources

Types of Resources

 Tangible resources

 Financial resources

 Physical resources

 Technological resources

 Organizational resources

 Intangible resources

 Human resources
  Innovation resources

 Reputation resources

Tangible Resources

 The firm’s borrowing capacity

 The firm’s ability to generate
internal funds
 Resources from which the
enterprises obtain the funds they
need to finance their investments,
capital and current activities.
 In simple terms, financial
resources are the monies that
keep a business operating.

Financial Resources
Examples include profits
generated by the business,
retained earnings, capital funding,
and liquid assets. Liquid assets
are business assets that can be
easily converted into cash. There
are also financial resources that
come from outside the business.
Examples of which are the loans
and credit from external sources,
such as banks.
Organizational Resources  The firm’s formal reporting
structure and its formal planning,
controlling, and coordinating
 systems
 These resources are necessary for
day-to-day functioning of the
organization.
 They are combined and used to
create finished products
 Organizational resources consist
of the concrete materials and
tangible assets that support
programs, practice improvements,
and service delivery. They
encompass adequate and stable
funding, staffing, facilities and
equipment, technology,
informational resources, and
program materials.
Physical Resources  May encompass a wide variety of
specific items and objects
depending on the nature of the
business
 These include all the tangible
resources owned and used by a
company such as land, building,
manufacturing equipment and
office equipment.
 Physical resources are important
for the functioning of the
organization since without things
like equipment and inventory and
manufacturing plant it is difficult for
 the business to function.
 In order to design, create, or
provide a product or service, it
Technological Resources
takes technological resources to
make it happen.

Intangible Resources

Human Resources  Person or group of people at a

company who manages all things
related to its employees.

This includes — but is not limited to —

hiring, maintaining a budget, recruiting,
managing benefits, ensuring employee
satisfaction, implementing a company
culture, and training new hires.
Innovation Resources  Ideas
 Scientific capabilities
 Capacity to innovate

This typically includes the ideas of

innovating some goods or services. The
capabilities to innovate something; so, it
often includes the knowledge and skills of
people in the organization.
Reputational Resources  Reputation with customers
 Brand name
 Perceptions of product quality,
durability, and reliability
  Reputation with suppliers

So, in simple terms, it is the firm’s

reputation. Or the public perception of the
company and how it operates. This
includes public opinions on the
company's products or services or how
the company treats its employees. A
reputation can be positive or negative,
and it can change over time.

Capabilities
 Represent the capacity to deploy resources that have been purposely integrated to
achieve a desired end state

 Emerge over time through complex interactions among tangible and intangible
resources

 Often are based on developing, carrying and exchanging information and knowledge
through the firm’s human capital

The foundation of many capabilities lies in:

 The unique skills and knowledge of a firm’s employees
 The functional expertise of those employees

Core Competencies

 Resources and capabilities that are the sources of a firm’s competitive advantage:
  Distinguish a company competitively and reflect its personality.
 Emerge over time through an organizational process of accumulating and
learning how to deploy different resources and capabilities.
 Activities that a firm performs especially well compared to competitors.
 Activities through which the firm adds unique value to its goods or services over a
long period of time.

VALUABLE
A resource or capability is said to be valuable if it allows the firm to exploit opportunities
or negate threats in the environment.

RARE
A resource or capability is rare simply if it is not widely possessed by other competitors.
For example, Coke’s brand name is valuable but most of Coke’s competitors (Pepsi,
7Up, RC) also have widely recognized brand names, making it not that rare. Of course,
Coke’s brand may be the most recognized, but that makes it more valuable, not rarer, in
this case.

Another example

COSTLY-TO-IMITATE OR INIMITABLE CAPABILITIES / NONSUBSTITUTABLE

A resource or capability is inimitable and non-substitutable if it is difficult for another firm
to acquire it or to substitute something else in its place.

Example: Nung hindi pa sikat ang Apple, mas patok before yung tablets. So, wala pa
masyadong iPad or iPhone that time. And then nung mas naging kilala sa market ang
Apple, dun na nag-take off yung Apple gadgets sa market. Apple was able to design
something that is hard to imitate successfully.