Vrin model example

Foundations of Strategic Capability:

- understand resources & capabilities.

VRIN Analysis & Advantage:

- see how VRIN tests capabilities.

Learning Outcomes.

2

Just as the external business environment is important (opportunities and threats), managers need to understand the the internal firm environment: the unique strengths and weaknesses of their firm relative to their competitors.

Internal Business Environment.

doing things

When Google entered the search engine market in 1998, there were many established rivals, e.g. AltaVista, HotBot, Lycos, Yahoo! etc.

But Google did not care much about competition. From the start, Google was happy to be different, i.e. different strategies & products.

From 2003, Google diversified into various industries such as Android phones, self-driving car project, Google glass etc.

Watch this video on Google history:

https://www.youtube.com/watch?v=n9eo8b3hEns

diFFerently

Strategic fit is about developing strategy by identifying opportunities in the business environment and adapting resources and competences so as to take advantage of these.

Strategic stretch is about identifying and leveraging the resources and competencies of the organization to yield new opportunities or to provide competitive advantage.

The contrast between strategic fit and strategic stretch exemplifies different views on how firms should compete in global markets.

Strategic Fit versus Strategic Stretch.

Resource-Based View of Strategy.

The RBV says that advantage and superior performance stem from the distinctiveness of what firms can do.

Positioning View: the business opportunity should be the starting point for developing successful strategies.

Resource-Based View: unique firm resources should be the starting point for developing successful strategies.

The RBV suggests that firms differ in their bundles of resources and what they can do – their capabilities.

6

Firms have resources and capabilities.

Resources are all assets, capabilities, organizational processes, firm attributes, information, knowledge, patents, real estate etc. controlled by a firm.

Capabilities are complex bundles of skills and collective learning, exercised through organizational processes, that ensure superior coordination of functional activities.