From the course: Developing a Competitive Strategy
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Finding your alpha
- Every company can be viewed as a bundle of resources and capabilities. By resources, I don't mean just those which are recognized and written up in accounting statements. Rather I mean all of the tangible and intangible resources that belong to the company. Besides things like money, buildings, machines, these would include brand names, technologies, patents, the company's organization, its culture, the location of its plants and offices, its relationships, and so forth. For every company, all of these resources and capabilities can be put into three buckets. In bucket one, that's what those resources and capabilities where the company is better than its competitors, maybe even anybody else in the world. I'd call this bucket the alpha bucket. The contents of this bucket are the company's strategic assets. They are the basis for the company's competitive advantage and the reason why the company can earn a return on investment higher than the cost of capital. For a company such as…
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