Internal Resources and Capabilities (Strategy) - Explained
What are Internal Resources and Capabilities?
Written by J. Mance Gordon
Updated at April 21st, 2024
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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.
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
- How Strategies Arise
- Intended, Deliberate, Realized, and Emergent Strategies
- Management and Strategic Planning
- Mintzberg's Schools of Strategic Development
- Design School
- Planning School
- Positioning School
- Entrepreneurial School
- Cognitive School
- Learning School
- Power School
- Culture School
- Environmental School
- Configuration School
- Mintzberg's 5Ps of Strategy
- McKinseys 7s Model
- ***Industry Analysis to Build a Strategy***
- Strategic Analysis
- SWOT Analysis
- SPACE Analysis
- Situational Analysis - 7C
- Competition Profile Matrix
- Stakeholder Analysis
- 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
- Business Performance Measurement
- Benchmarking
- Balanced Scorecard
- Economic Value Added
- Activity-Based Management
- Quality Management
- Action Profit Linkage Model
- Business Activity Monitoring
- Gap Analysis
- Strategy Diamond
- BCG Growth-Share Matrix
- GE McKinsey Matrix
- Value Reporting Framework
- Pyrrhic Victory