Question

1.         Explain what is meant by the internal context of strategy.

2.         Identify a firm's resources and capabilities and explain their role in its performance.

3.         Define dynamic capabilities and explain their role in both strategic change and a firm's performance.

4.         Explain how value?chain activities are related to firm performance and competitive advantage.

5.         Explain the role of managers with respect to resources, capabilities, and value?chain activities.

Answer 1

1. A strategy is a plan of action developed in ordered to achieve certain objectives. Therefore, the strategy is about reviewing where a firm currently is, where it wants to be in a given time and the plan of action required to be there. Strategies help a firm exploit the opportunities in the market and manage the threats. Therefore, the organizational strategy is based on various internal aspects of a firm such as internal resources, capabilities, value-chain activities, managerial capabilities, etc. No effective strategy can be developed without considering these internal factors. These factors constitute the internal context of strategy. For example, Apple develops its strategies considering its internal capabilities (such as designing expertise, innovations, etc.), resources (patents, global supply chain, knowledge, infrastructure, brand name, capable manpower, etc.) to develop its strategies to exploit the market. These internal factors constitute the internal context of strategy.