analysis helps a firm: • determine if its resources and capabilities are likely sources of competitive advantage • establish strategies that will exploit any sources of competitive advantage Copyright © 2012 Pearson Education‚ Inc. publishing as Prentice Hall. 3-3 Evaluating a Firm’s Internal Capabilities The Theory Behind Internal Analysis The Resource-Based View • developed to answer the question: Why do some firms achieve better economic performance than others? • used to help firms achieve competitive
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potential means used by suppliers to exert power over firms competing within an industry. A firm should try to recover cost increased by its suppliers through its own pricing structure or its profitability is reduced by its suppliers’ actions. A supplier group is powerful when: • It is dominated by a few large companies. •
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1. Introduction There is an abundance of models and theories which describe and explain internationalization‚ foreign entry modes and the foreign operations of firms (Elo‚ 2005). These models can be divided into two different perspectives: behavioural and economic (Elo‚ 2005‚ p.65). It is also suggested that the literature based on economic theory‚ which focuses on new market opportunities‚ internationalization‚ vertical integration and corporate growth‚ has been dominating. Whereas‚ behavioural
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Discussion Questions 1. Comment on the following from the owner of a successful plywood mill. “Firms don’t use location theory to make location decisions. I chose this location for my plywood mill due to its proximity to my favorite fishing spot.” Firms do use location theory to make location decisions. The location that a firm chooses depends on where the transportation cost will be the lowest. A firm that is resource-oriented will locate closest to the raw materials site because the cost to transport
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______and how to manage these businesses. a.whether the firm should invest in global or domestic businessesb. what product markets and businesses the firm should be inc. whether the portfolio of businesses should generate immediate above-average returns or should be troubled businesses which will create above-average returns only after restructuringd. whether to integrate backward or forward. | b. what product markets and businesses the firm should be in (p.158) | The ultimate test of the value
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structure. 3 I. The question of value • Do firm’s resources and capabilities add value ? • By answering the question of value‚ managers link analysis of internal resources and capabilities with the analysis of environmental opportunities and threats. – Firms resources are not valuable in a vacuum – Resources are valuable when they exploit opportunities and/or
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Volume-variety and design In Chapter 1 the four V’s of operations were described. These were volume‚ variety‚ variation and visibility. The first two of these – volume and variety – are particularly important when considering design issues in operations management. Not only do they usually go together (high variety usually means low volume‚ high volume normally means low variety) but together they also impact on the nature of products and services and processes which produce them. The volume and
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defense wherein the target firm makes its stock less attractive to a potential acquirer is called Choose one answer. | a. a standstill agreement. | | | b. greenmail. | | | c. a poison pill. | | | d. crossing the palm with silver. | | Question 38 Marks: 1 Compared to managers‚ shareholders prefer Choose one answer. | a. riskier strategies with greater diversification for the firm. | | | b. riskier strategies with more focused diversification for the firm. | | | c. safer strategies
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as a good tool to examine the internal environment of a firm. They state that VRIO “stands for four questions one must ask about a resource or capability to determine its competitive potential: 1. The Question of Value: Does a resource enable a firm to exploit an environmental opportunity‚ and/or neutralize an environmental threat? 2. The Question of Rarity: Is a resource currently controlled by only a small number of competing firms? [are the resources used to make the products/services or
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ECONOMIES OF SCALE When a firm moves from small scale to large scale production‚ the average cost of production of each unit falls. The reasons for which this happens are known as economies of scale – they are the benefits which result in the cost savings of large scale operations which come about when a firm expands. In other words‚ economies of scale are advantages reaped by firms engaging in large scale production. There are two types of economies of scale. They are: * Internal economies
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