The document discusses internal factors that affect firms and how firms can leverage their core competencies, resources, and capabilities to gain competitive advantages. It introduces several key concepts from the resource-based view including tangible and intangible resources, the VRIO framework, isolating mechanisms, path dependence, causal ambiguity, social complexity, intellectual property protection, core rigidity, dynamic capabilities, and the value chain. Firms can use tools like the SWOT analysis to identify their unique strengths and weaknesses and develop strategies to strengthen their competitive position.

1. Assignment
Submitted To:
Sir Masood ul Hassan
Submitted By:
Saqib Javed
BAF-14-10
BS Accounting and Finance Evening
Session 2014-18

2. Chapter 4 (Summary)
In this chapter we have studied the internal factors that effects a firm and the way
that how to work on them. What are the key tools that help in order to attain
advantages and how we can make our firm strong and overcome our weaknesses.
Core competencies
Unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive
advantage.
Resources
Any assets that a firm can draw on when formulating and implementing a strategy.
Capabilities
Organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them
strategically.
Activities
Distinct and fine-grained business processes that enable firms to add incremental value by transforming
inputs into goods and services.
Resource-based view
A model that sees certain types of resources as key to superior firm performance.
Tangible resources
Resources that have physical attributes and thus are visible
Intangible resources
Resources that do not have physical attributes and thus are invisible.
Resource heterogeneity
Assumption in the resource-based view that a firm is a bundle of resources and capabilities that differ
across firms.

3. Resource immobility
Assumptions in the resource-based view that a firm has resources that tend not move easily from firm to
firm.
VRIO framework
A theoretical framework that explains and predicts firm-level competitive advantage.
Valuable resource
One of the four key criteria in the VRIO framework. A resource is ______ if it helps a firm exploit an
external opportunity or offset an externalthreat.
Rare resource
One of the four key criteria in the VRIO framework. A resource is _______ if the number of firms that
possess it is less than the number of firms it would require to reach a state of perfect competition.
Costly-to-imitate resource
One of the four key criteria in the VRIO framework. A resource is ______ if firms that do not possess the
resource are unable to develop or buy the resource at a comparable cost.
Organized to capture value
One of the four key criteria in the VRIO framework. The characteristic of having in place an effective
organizational structure,processes,and systems to fully exploit the competitive potential of the firm's
resources,capabilities, and competencies.
Isolating mechanisms
Barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
Path dependence
A situation in which the options one faces in the current situation are limited by decisions made in the
past.
Causal ambiguity
A situation in which the cause and effect of a phenomenon are not readily apparent.

4. Social complexity
A situation in which different social and business systems interact with one another.
Intellectual property protection
A critical intangible resource that can provide a strong isolating mechanism, and thus help to sustain a
competitive advantage.
Core rigidity
A former core competency that turned into a liability because the firm failed to hone, refine, and upgrade
the competency as the environment changed.
Dynamic capabilities
A firm's ability to create deploys, modify, reconfigure, upgrade, or leverage its resources in its quest for
competitive advantage.
Dynamic capabilities perspective
A model that emphasizes a firm's ability to modify and leverage its resource base in a way that enables it
to gain and sustain competitive advantage in a constantly changing environment.
Resource stocks
The firm's current level of intangible resources.
Resource flows
The firm's level of investments to maintain or build a resource.
Value chain
The internal activities a firm engages in when transforming inputs into outputs; each activity adds
incremental value.
Primary activities
Firm activities that add value directly by transforming inputs into outputs as the firm moves a product or
service horizontally along the internal value chain.

5. Support activities
Firm activities that value indirectly, but are necessary to sustain primary activities.
SWOT analysis
A framework that allows managers to synthesize insights obtained from an internal analysis of the
company from an analysis of external issues to derive strategic implications