• Entry
  • Reader's guide
  • Entries A-Z
  • Subject index

Capabilities Approach

Capabilities are a firm’s capacity to deploy resources. A firm creates value by utilizing its organizational and managerial skills to identify, prioritize, and orchestrate a diverse set of resources to achieve a common objective. A hammer and a blueprint might be tangible resources, but a house would not get built without the intangible capabilities to coordinate, problem solve, and organize and without the resourcefulness and the ability of a firm to overcome obstacles as they arise.

Capabilities are categorized in three different ways. First, static capabilities reflect an ability to perform efficiently a basic business function (e.g., distribution, marketing, operations, logistics) when compared with rivals. For example, Coca-Cola and Pepsi have significantly better global distribution and brand management capabilities than their carbonated soft drink competitors. They ...

    • Loading...
    locked icon

    Sign in to access this content

    Get a 30 day FREE TRIAL

    • Watch videos from a variety of sources bringing classroom topics to life
    • Read modern, diverse business cases
    • Explore hundreds of books and reference titles