Resources, capabilities and core competences
Resources, capabilities and core competencies are the foundation of competitive advantage. Resources are bundled to create organizational capabilities. In turn, capabilities are the source of a firm’s core competencies, which are the basis of competitive advantages. Here, we define and provide examples of these building blocks of competitive advantage.
1. Resources
Broad in scope, resources cover a spectrum of individual, social and organizational phenomena. Typically, resources alone do not yield a competitive advantage. In fact, a competitive advantage is generally based on the unique bundling of several resources. For example, www.Ocado.com combined service and distribution resources to develop its competitive advantages. The firm started as an online retailer, directly shipping orders from the product range of Waitrose, a leading UK retailer to customers. It quickly grew and established a distribution network through which it could deliver groceries to customers’ doorsteps. With its 2010 initial public offer (IPO) to employees, managers and customers who spent more than £300, Ocado has opened retail furthermore to the internet. Lacking Ocado’s combination of resources, traditional bricks-and-mortar retailers initially found it difficult to establish an effective online presence. These difficulties led some of them to experimenting and to developing partnerships with Ocado. Through these arrangements, Ocado now handles the online presence and shipping of goods for several firms, including Waitrose – which can now focus on sales in its stores. These types of arrangements are useful to the bricks-and-mortar companies because they have little experience in shipping large amounts of diverse merchandise directly to individuals.
Some of a firm’s resources (defined as inputs to the firm’s production process) are tangible, while others are intangible. Tangible