Each corporation is a collection of unique resources and capabilities that provides the basis for its strategy and the primary source of its returns. In today's hyper-competitive landscape, a firm is a collection of evolving capabilities that is managed dynamically in pursuit of above-average returns. Thus, differences in firm's performances across time are driven primarily by their unique resources and capabilities rather than by an industry's structural characteristics.

 

 

 
 

Resources are inputs into a firm's production process, such as capital, technology, equipment, talented managers,  skills of individual employees, intellectual property, and finance.

Resources can be classified into three categories:

1. Physical capital

2. Human capital

3. Organizational capital.

Resources are either tangible or intangible in nature. With increasing effectiveness, the set of resources available to the firm tends to become larger. Individual resources may not yield to a competitive advantage. It is through the synergistic combination and integration of sets of resources that competitive advantages are formed.

 

 

 
 

A capability is the capacity for a set of resources to integratively perform a stretch task or an activity. The opportunity for your company to sustain your competitive advantage is determined by your capabilities of two kinds – distinctive capabilities and reproducible capabilities – and their unique combination you create to achieve synergy.

Through continued use, capabilities become stronger and more difficult for competitors to understand and imitate. As a source of competitive advantage, a capability should be neither too simple that it is highly imitable, nor too complex that it defies internal steering and management.

 
 

Core Competencies  ▪  Distinctive Capabilities  ▪  Functional Capabilities

  

 

 
 

Resource-based Model of Strategic Management

Resource-based model of strategic management is about achieving superior returns by best exploiting internal resources and capabilities... More