Resource-based model figure

• inputs into a firm's production process

  resources
• 1. Identify the firm's resources.

  Study its strengths and weaknesses compared with those of competitors
• capacity of an integrated set of resources to integratively perform a task of activity

  capability
• 2. Determine the firm's capabilities

  What do the capabilities allow the firm to do better than its competitors
• ability of a firm to outperform its rivals

  competitive advantage
• 3. Determine the potential of the firm's resources and capabilities in terms of a competitive advantage.
• an industry with opportunities that can be exploited by the firm's resources and capabilities

  attractive industry
• 4. Locate an attractive industry
• strategic actions taken to earn above-average returns

  strategy formulation and implementation
• 5. Select a strategy that best allows the firm to utilize its resources and capabilities relative to opportunities in the external environment
• earning of above-average returns

  superior returns