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Internal Resources and Capabilities (Strategy) - Explained

What are Internal Resources and Capabilities?

Written by Jason Gordon

Updated at April 14th, 2023

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What are Internal Resources and Capabilities? 

Firms create value by exploiting internal resources and capabilities to meet market demands.

What constitutes a resource can be varied and diverse.

Back to: STRATEGY & PLANNING

Tangible resources include:

  • Physical
  • Financial
  • Organizational
  • Technological

Intangible resources include:

  • Human
  • Reputation
  • Innovation

Resources along, generally, do not result in competitive advantage.

Competitive advantage results from how resources are employed.

The value of the resources is measured by the extent to which it contributes to the development of a competitive advantage.

Capabilities

A company’s capabilities concerns it ability to deploy resources.

They generally materialize through the development and exchange of information, knowledge, and processes.

While resources are acquired, capabilities are developed.

The use and execution of capabilities is accounted for within Porter’s Value Chain.

The value chain classified capabilities as primary and secondary.

Primary activities add direct value to the firm.

Related Topics

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  • Intended, Deliberate, Realized, and Emergent Strategies
  • Management and Strategic Planning
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  • Entrepreneurial School
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  • Mintzberg's 5Ps of Strategy
  • McKinseys 7s Model
  • ***Industry Analysis to Build a Strategy***
  • Strategic Analysis
  • SWOT Analysis
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  • Situational Analysis - 7C
  • Competition Profile Matrix
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  • Stakeholder Mapping
  • Resources and Capabilities
  • VMOST
  • Core Competency
  • VRIO Analysis
  • Value Chain Analysis
  • Internal Factor Analysis
  • Value Creation Index
  • Minimum Efficient Scale
  • PEST(LE) Analysis
  • Industry Lifecycle Analysis
  • Company Lifecycle - Definition
  • Porter's Five Forces
  • Modes of Management
  • External Factor Evaluation
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  • Eclectic Implementation Model
  • Mintzberg's Modes of Strategic Decision-Making
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  • Balanced Scorecard
  • Economic Value Added
  • Activity-Based Management
  • Quality Management
  • Action Profit Linkage Model
  • Business Activity Monitoring
  • Gap Analysis
  • Strategy Diamond
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