REVIEW QUESTIONS

1. Why is it important for a firm to study and understand its internal organization?

Internal organization is essential for the company to examine and comprehend, since it may
evaluate the firm's advantages and shortcomings. Also, the expertise and strategies that
the company may use will help them to achieve better objectives and goals.

2. What is value? Why is it critical for the firm to create value? How does it do so?

A customer's willingness to pay a particular price for a product's performance and qualities
is referred to as Value. A company's value increases its credibility in a competitive market
and offers it a competitive advantage. They accomplish this by incorporating all types of
values and assessing the long-term health and well-being of the firm.

3. What are the differences between tangible and intangible resources? Why is it important for
decision makers to understand these differences? Are tangible resources more valuable for
creating capabilities than are intangible resources, or is the reverse true? Why?

Tangible resources are assets that can be seen and measured, whereas intangible resources
are assets that cannot be seen or quantified. Intangible resources are firmly embedded in a
company's inventory and build through time, making them hard to analyze and initiate for
competitors and by those Tangible resources are more valuable. Because resources are the
source of a firm's competencies, it is essential for decision makers to grasp the differences.
So, it is important to understand these kinds of things for the betterment of company.

4. What are capabilities? How do firms create capabilities?

The collected knowledge and skills incorporated in a company's established procedures

and practices are known as capabilities. Firms have developed capabilities by utilizing
internal resources while still fulfilling the strict requirements for global competitiveness.

5. What four criteria must capabilities satisfy for them to become core competencies? Why is it
important for firms to use these criteria to evaluate their capabilities’ value creating
potential?

The four criteria are values and ethics; roles and responsibilities for collaborative practice;
interprofessional communication; and teamwork and team-based care. It is essential for
firms to employ these four criteria to guarantee that their core skills are tough for
competitors to duplicate and recreate. Otherwise, these firms will go out of operation in
the future.

6. What is value chain analysis? What does the firm gain by successfully using this tool?

Value chain analysis is a strategy tool used to analyze internal firm activities. It’s an
analysis aims to boost revenues by developing a product or service that is outstanding. So,
that customers are willing to pay more on it.
7. What is outsourcing? Why do firms outsource? Will outsourcing's importance grow in the
future? If so, why?

The purchase of a value-creating activity to an outside provider who can give the best value
is known as Outsourcing. When a company identifies principal and support operations in
which its strategic resources are sources of sustained competitive advantage, it is more
likely to outsource. Outsourcing has the ability to cut expenses while also improving the
quality of the operations that are outsourced. It improves product quality offered to
customers in this way.

8. How do firms identify internal strengths and weaknesses? Why is it vital that managers
have a clear understanding of their firm’s strengths and weaknesses?

By evaluating their internal workplace environment, companies may determine their

internal strengths and weaknesses. It is vital for managers to ensure that they have the
correct resources if a resource is deemed appropriate, it can be developed into a core
competence.

9. What are core rigidities? What does it mean to say that each core competence could become
a core rigidity?

Core Rigidity is a key strength which is typically excessively powerful within a firm, and
it cannot change if the balance shift in the external environment. Every core competency
has the potential to become a core rigidity that results a previous core competency that now
generates stagnation and stifles creativity.
MINI CASE

1. What influences from the external environment over the next several years do you think
might affect the way Zara competes?

The external environment's effect on the way Zara competes over the next several years
might be the constant growth of insights in the Fast Fashion industry. Zara would be able
to forecast the needs and expectations of its clients in advance using this analytics method.
And, thanks to the company's outstanding supply chain management, those expectations
will be met effectively. Zara will benefit from this type of analysis.

2. How easy or difficult do you think it would be for competitors to imitate Zara’s supply
chain as a capability?

Zara's competitors would have a hard time duplicating its supply chain management and
matching its successes. Zara can deliver personalized orders to any shop across in 24 to
48 hours. This is attainable because it has a large stock of basic material, its own dyeing
plant, and its own factory for manufacturing clothes.

3. Is getting products to customers as quickly as possible an outcome that you believe would
create value in industries in addition to clothing? If so, which industries and why?

As I stated earlier, Zara's technique of delivering items to buyers as early as possible might
well be highly beneficial to a wide range of businesses because those businesses would be
able to acquire supplies instantly and will not have to hold large stocks. This strategy can
also be implemented by markets continue providing new food products that are in great
demand during a certain period

4. What value does Zara create for its customers?

Zara’s value is providing its customers with the most up-to-date and fashionable apparel at
an affordable price. She wants to provide clients with exactly whatever they want and to
deliver it sooner. Zara's staff takes this knowledge and uses it to create rapid and innovative
patterns and designs.

5. As you study how Zara competes and the capabilities it uses to do so, are there areas of the
firm’s operations you believe might be candidates for outsourcing? If so, what areas and
why might those be outsourced in the future?

As it handles operations to produce fast fashion, the firm has a unique combination of skills
that work well together. Zara can consider opening an industrial building in America in the
near future, despite the fact that the business prefers to keep its production facility in Spain,
constructing an industrial building in the America can help the company save money on
taxes it pays when shipping goods from Spain.