Strategic Capability, Resources and Competence
Resources versus competences
Resources are what an organisation has (tangible: plant, cash, patents; intangible: brand, culture, knowledge). Competences are what it does well - the skills and routines that deploy resources. A threshold competence is the minimum needed to compete; a core competence is distinctive, hard to imitate and central to customer value. The trap: labelling every strength a 'core competence'. Test distinctiveness and inimitability before claiming it.
The VRIN/VRIO test
A resource yields sustained competitive advantage only if it is Valuable, Rare, Inimitable and Non-substitutable (VRIN), often extended to Organisation (VRIO). Inimitability arises from causal ambiguity, path dependence, social complexity and tacit knowledge. Questions often present a resource that is valuable and rare but easily copied - that gives temporary, not sustained, advantage.
Value chain and value network
Use Porter's value chain to locate where value is created and where cost or differentiation advantage sits (primary vs support activities). The value network extends this to partners and outsourcing. A common trap is confusing the value chain (internal activities) with the value system/network (inter-organisational).
Benchmarking and the experience curve
Benchmarking compares against best practice; the experience curve shows unit costs falling with cumulative output. Do not confuse the experience curve with economies of scale (scale is output per period; experience is cumulative).
Worked rule of thumb
When asked whether a capability is a source of advantage, run the VRIN checklist in order and stop at the first 'no'. If it fails inimitability, the answer is 'temporary advantage at best'.