CHAPTER 4:

EVALUATING
THE
INTERNAL
ENVIRONME
NT
Cris Barrion

Merly Rose Donesa

Kate Palomo

Hazel Salcedo

Roseyen Gonzales
1. What is the Resource- Based View and
why is it important to organizations?
2. How is the VRIO tool applied to
strategic resources?
3. In what ways can intellectual property
serves as a value- added resource for
organizations?
4. What are isolating mechanisms and
how can they contribute to a firm’s
competitive advantage?
5. How can the Value Chain be applied to
achieve a competitive advantage?
 Strategic Management involves
evaluating the external environment,
internal resources, and capabilities of
a firm to determine its competitive
position. Internal assessments, such
as financial evolution and models like
the Resource- Based View and VRIO
framework, help identify valuable
resources for a sustained competitive
advantage. Value Chain Analysis can
also improve organizational
performance by addressing
weaknesses in the firm’s activities.
 Managing firmMy resources
Chart Title
is a critical as-
pect of strategic management. It involves
effectively and efficiently utilizing the
resources available to your organization
to achieve its strategic objectives and MANAGING
gain a competitive advantage in the mar- FIRM
ket. RESOURCES
KEY POINTS TO CONSIDER
WHEN MANGING FIRM
RESOURCES

1. IDENTIFY AND
ASSESS YOUR
RESOURCES

Begin by identifying all the

resources within your
organization, including financial
resources, human capital,
physical assets, technology,
brand reputation, and
intellectual property.
 KEY POINTS TO CONSIDER
WHEN MANGING FIRM
RESOURCES
Once you have identified
2. ALLOCATE your resources, allocate
RESOURCES them in a way that aligns
STRATEGICALLY with your strategic
priorities.

Focus on developing core

3. DEVELOP
competencies that set
CORE
your organization apart
COMPETENCIES
from competitors.
 KEY POINTS TO CONSIDER
WHEN MANGING FIRM
RESOURCES
Regularly monitor and
4. MONITOR
evaluate how your
RESOURCE
resources are being
UTILIZATION
utilized.

Cultivate a culture within

5. FOSTER A
your organization that
CULTURE OF
values and promotes
RESOURCE
effective resource
MANAGEMENT
management.
 According to resource- based view
theory, organizations that own
“strategic resources” have important
competitive advantages over
organizations that do not. Some
resources such as cash and trucks, are
not considered to be strategic
resources because an organization’s
competitors can readily acquire them.
Instead, a resource is strategic to the
extent that is is valuable, rare, difficult
to imitate, and organized to capture
value.
 STRATEGIC
RESOURCES
VALUABLE resources aid in
improving the organization’s
effectiveness and efficiency
VALUABLE
while neutralizing the
opportunities and threats of
competitors.

RARE resources are those held

RARE by few or no other
competitors..
 STRATEGIC
RESOURCES
DIFFICULT-TO-IMITATE resources often
involve legally protected intellectual
DIFFICULT- TO- IMITATE
property such as trademarks, patents,
or copyrights.

ORGANIZED TO CAPTURE VALUE

Having in place the organizational
ORGANIZED TO systems, processes, and structure to
CAPTURE VALUE capitalize on the potential of the
resources and capabilities of the firm
to provide a competitive advantage.
RESOURCES AND CAPABILITES

RESOURCES

TANGIBLE RESOURCES are INTANGIBLE RESOURCES

resources that can be readily seen, include, for example, the
touched, and quantified. Physical knowledge and skills of
assets such as firm’s property,
plant, and equipment are employees, a firm’s
considered to be tangible reputation, and a firm’s
resources, as is cash. culture.
RESOURCES AND CAPABILITES

CAPABILITIES

A dynamic capability
exists when a firm is
skilled at continually
updating its array of
capabilities to keep pace
with changes in its
environment
  The term intellectual property
refers to creations of the
mind, such as inventions,
artistic products, and
INTELLECTUAL symbols.
PROPERTY  Some forms of intellectual
property are protected by law
while others can best be
defended by surrounding
them in secrecy.
 TYPES OF INTELLECTUAL PROPERTY

• Patents protect • Trademarks are • Copyrights provide • Trade secrets refer

inventions from phrases, pictures, exclusive rights to to formulas,
direct imitation for names, or symbols the creators of practices, and
a limited period of used to identify a original artistic designs that are
time. particular works such as central to a firm’s
organization. books, movies, business and that
songs, and remain unknown to
screenplays. competitors.
TRADEMAR COPYRIGH TRADE
PATENTS
KS TS SECRETS
  If a firm can prevent a
competitor from imitating the
resource or capability that
ISOLATING gives it a competitive
MECHANISM advantage, it is able to
sustain that advantage
longer. This strategy is called
isolating mechanisms.
OTHER ISOLATING
MECHANISMS
SOCIAL COMPLEXITY
• Social complexity creates a barrier to
imitation and can prolong a competitive
advantage possessed by an organization.
Social complexity might arise through certain
customer relationships or with key political
figures, provided they can help the firm’s
competitive position.
OTHER ISOLATING
MECHANISMS
PATH DEPENDENCE
• Path dependence can serve as an isolating mechanism
to block competitors from gaining the same position in
the market.

CAUSAL AMBIGUITY
• The third isolating mechanism, causal ambiguity,
means the reason for achieving a competitive
advantage is not apparent. The cause for success is
obscure and not understood well.
ELEMENTS OF THE VALUE
CHAIN

When executives choose

strategies, an
organization’s resources
and capabilities should be
examined alongside
consideration of its value
chain. A value chain charts
the path by which products
and services are created
and eventually sold to
customers (Porter, 1985).
The Value Chain is used as
an internal assessment tool
to help a firm determine
where it might be able to
achieve a competitive
advantage.
  This chapter explains key issues that
executives face in managing resources to keep
their firms competitive. Resource-based theory
argues that firms will perform better when
they assemble resources that are valuable,
rare, difficult-to-imitate, and organized to
capture value. When executives can
CONCLUSION successfully bundle organizational resources
into unique capabilities, the firm is more likely
to enjoy lasting success. Different forms of
intellectual property—which include patents,
trademarks, copyrights, and trade secrets—
may also serve as strategic resources for firms.
Examining a firm’s resources can be aided by
the value chain, a tool that systematically
examines primary and secondary activities in
the creation of a good or service