Subject Name: Business Strategy

Topic Name(s): Internal Resources

Lecture No: 11

Suman Choudhary,
ISBM

08/23/2020 Lecture Number, Unit Number 1

 Internal Resources

BASICS

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 Relationship among resources, capabilities,
and core competencies
a. Resources are the source of a firm‘s capabilities.

b. Capabilities, in turn, are the source of a firm‘s core competencies.

c. A firm‘s core competencies are the basis for its competitive advantages in the marketplace.

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 Key Terms
Tangible Resources - assets that can be observed and quantified

Intangible Resources - assets that typically are rooted deeply in the

firm‘s history and have accumulated over time

Reputation- level of awareness a firm has been able to develop

among stakeholders
Social Capital - relationships with other organizations that
contribute to the creation of value.

Strategic Value of Resources - degree to which resources can

contribute to the development of capabilities, core competencies,
and ultimately, competitive advantage

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 Tangible vs. Intangible Resources
Resources are what a firm has to work with—its assets—including its people and the value of
its brand name. Tangible resources are in essence those things that you can put your hands
on such as property, plant and equipment, personnel, raw materials, and so on. One highly
illustrative example of tangible resources and how the strategic utilization/manipulation of
them can have a great impact on a firm’s profits are diamonds. Cartier owns or controls over
95% of the world’s diamond mines. If the entire supply of diamonds were to be released onto
the world market, the gems would devalue to 10% of the current market price or less. Cartier
controls the amount, timing, quality, grade (size), and destination point of virtually every
batch of diamonds that is released onto the world market. In doing so, Cartier is able to
control the market price of the gems and therefore is able to manipulate profits.

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Capabilities - firm‘s capacity to deploy resources that have been purposely integrated to
achieve a desired end state

Core Competencies - resources and capabilities that serve as a source of competitive

advantage for a firm over its rivals. Core Competencies A firm’s core competencies are
those things it does that give it a competitive advantage over another firm. They are
generally valuable, rare, costly to imitate, and non substitutable. They may or may not be
unique to the firm. They may simply be an industry practice that a firm does better, or a
set of industry practices the firm does in a specific combination or sequence that allows
the firm to be more efficient than its competitors.

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