Chapter 3 Questions 1. Why is it important for a firm to study and understand its internal organization? a. It is important for firms to study and understand its internal organizations because it’s needed to figure out other things, such as strategic competiveness. In the current competitive landscape, the most effect organizations recognize that strategic competitiveness and above-average returns result only when core competencies (which is identified by understanding and studying the firm’s internal organization) are matched with opportunities (which are determined by studying the firm’s external environment). 2. What is value? Why is it critical for the firm to create value? How does it do so? a. Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay. Firms create value by innovatively bundling and leveraging their resources to form capabilities and core competencies. It is important for the firm to create value because over time, their rivals use their own unique resources, capabilities, and core competencies to form different value-creating propositions that duplicate the focal firm’s ability to create value for customers. Because competitive advantages are not permanently sustainable, firms must exploit their current advantages while simultaneously using their resources and capabilities to form new advantages that can lead to future competitive success.
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