The paper “ Four Criteria of Firm's Capabilities Have the Potential to Create a Sustainable Competitive Advantage” is affecting variant of the literature review on human resources. A sustainable competitive advantage (SCA) takes place when the firm develops or gets numerous attributes that enable it to outclass its competitors. Such attributes may include access to highly skilled and trained employees or access to natural resources. The core competencies according to Hitt et al. (2008, p. 81) are things that offer a competitive advantage to a firm over its competitors. Therefore, core competencies can be defined as capabilities and resources, which act as a source of the firm’ s competitive advantage over its competitors.
Generally, core competencies are valuable, rare, expensive to imitate as well as non-substitutable. Capabilities can be defined as the capacity of the firm to distribute resources, which are intentionally integrated so as to realize the sought after end state. On the other hand, resources can be described as the firm’ s assets such as employees and its brand name value. Imperatively, the firm‘ s capabilities are sourced from the resources. According to resource-based theory (RBT), when the valuable, rare, inimitable, and non-substitutable (VRIN) resources of a firm are utilized well, a sustainable competitive advantage can be realized (Mutunga et al. , 2014, p. 147).
A glimpse at the current business environment exhibit that the factors that affect the contemporary business environment are more complex and exceedingly challenging as compared to the past business environment. Technology advancement, new manufacturing techniques, as well as customer power are amongst characteristics of the contemporary business environment, and all are related to the complexity and dynamics of the markets. Managers understand that identifying competitive factors, threats, as well as opportunities, is not sufficient for a successful strategy.
Therefore, they have to determine which sources and competences are accessible in the firm so as to accurately examine the firm’ s strategic competences. The essay seeks to critically explain the four specific criteria managers can utilize so as to decide which of their firm's capabilities can create a sustainable competitive advantage.
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