major sets of activities, skills, and resources that drive value to customers.
at the time of strategy formulation, when firms are assessing which strategic options are currently feasible—and may be included in a broader process of determining strengths, weaknesses, opportunities, and threats (SWOT).
capabilities analysis can be used to determine which capabilities are perhaps non-core and therefore candidates for outsourcing or external partnering.
Truly understanding a firm’s competitive strengths requires more than just an understanding of that organization’s tangible assets. Indeed, the key building blocks of competitive advantage are often more likely to involve the firm’s intangible assets.
Capabilities analysis is based on the resource-based view (RBV) of strategy that emphasizes the internal skills and resources of the firm. The RBV asserts that resources and capabilities can be a source of competitive advantage when they are (a) valuable, (b) rare, (c) inimitable, and (d) non-substitutable.
Step 1. Determine the value chain for your business. (bargaining power, capabilities, partners, and defensibility.)
Step 2. Isolate the core set of capabilities.
Step 2a. Processes.
Step 2b. People. ( (a) most central to value creation and (b) unique and difficult to replace. )
Step 2c. Systems. ( (a) operational, (b) relational, and (c) transformational.)
Step 3. Determine degree of alignment.
Step 3a. Internal alignment.
Step 3b. External alignment.
Step 4. Determine sustainability.
Step 4a. Imitation.
Step 4b. Durability