Strategic Capabilities and resources
Chapter 3 – Strategic Capability
In the previous chapter, we learned how to analyse the environment that surrounds a company. But, it is also important to study the internal strategic capabilities of the firm, because, since your competitors are in the same environment, that is what distinguishes the companies performances.
Foundations of Strategic Capability
Strategic Capabilities can be defined as the resources and competences (strategic assets) of an organisation needed for it to survive and prosper. Resources are physical and intangible assets a company has such as plant, people and finance for physical and information, reputation and knowledge for intangible. Competences mean the skills and abilities by which resources are deployed effectively through an organisation’s activities and processes. These capabilities can be divided into two groups, threshold or unique and core. Threshold capabilities are those needed for and organisation to meet the necessary requirements to compete in a given market. These could be threshold resources required to meet minimum customer requirements. While they are important, they do not of themselves create competitive advantage or the basis of superior performance. This depends on an organisation having distinctive or unique capabilities that competitors will find difficult to imitate. This could be because the organisation has unique resources or core competences.
To survive and prosper an organisation needs to address the challenges of the environment that it faces, discussed in Chapter 2. In particular it must be capable of performing in terms of the critical success factors that arise from demands and needs of its cus- tomers, discussed in section 2.4.4. The strategic capability to do so is dependent on the resources and the competences it has. These must reach a threshold level in order for the organisation to survive. The further challenge is to achieve com- petitive advantage. This requires it to have
In the previous chapter, we learned how to analyse the environment that surrounds a company. But, it is also important to study the internal strategic capabilities of the firm, because, since your competitors are in the same environment, that is what distinguishes the companies performances.
Foundations of Strategic Capability
Strategic Capabilities can be defined as the resources and competences (strategic assets) of an organisation needed for it to survive and prosper. Resources are physical and intangible assets a company has such as plant, people and finance for physical and information, reputation and knowledge for intangible. Competences mean the skills and abilities by which resources are deployed effectively through an organisation’s activities and processes. These capabilities can be divided into two groups, threshold or unique and core. Threshold capabilities are those needed for and organisation to meet the necessary requirements to compete in a given market. These could be threshold resources required to meet minimum customer requirements. While they are important, they do not of themselves create competitive advantage or the basis of superior performance. This depends on an organisation having distinctive or unique capabilities that competitors will find difficult to imitate. This could be because the organisation has unique resources or core competences.
To survive and prosper an organisation needs to address the challenges of the environment that it faces, discussed in Chapter 2. In particular it must be capable of performing in terms of the critical success factors that arise from demands and needs of its cus- tomers, discussed in section 2.4.4. The strategic capability to do so is dependent on the resources and the competences it has. These must reach a threshold level in order for the organisation to survive. The further challenge is to achieve com- petitive advantage. This requires it to have