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Define firm performance; competitive advantage, VRIO framework

1). What might we mean by firm performance?
2). What is competitive advantage, in OPERATIONAL and CONCRETE terms?
3). Assess the merits of the VRIO framework when determining a firm's competetive advantage.

The class is using the book "Gaining and Sustaining Competetive Advantage" by Jay B. Barney published by Pearson/Prentice Hall.

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Strategic Management

Answer 1:
Firm Performance

Firm performance refers to an organization's effectiveness in the market in comparison to its rival firms. Effectiveness of an organization in terms of creating economic value represents the firm's performance in the market. Economic value means the difference among perceived benefits and economic cost of a product or service (Barney, 2007).

Effective firm performance may lead to get competitive advantage in the market. Proper alignment between organizational goals and performance might call as firm performance. Success in the market with required level of profitability and productivity might be categorized under firm performance (Jeschke, 2008). A firm performance may be a proper balance between its current objective and expected objectives. Firm performance may be expressed in terms of its alignment with the required level of expertise. Like, if a firm is contributing well in the economic development of a county, it may be considered as a good performance of the firm. Similarly, if a firm is attaining its stated objectives in time, it might be expressed as a firm's performance.

Proper growth in terms of revenues and income of a firm may be considered as a firm's performance. A firm performance means an alignment of the resources that are valuable enough to the business. The mission and vision of a firm may explain its performance. There are lots of visionary firms like Wal-Mart, Citicorp, Boeing, American Express etc those are aimed to attain a specific aim or goal to carry out their business (Barney, 2007). A firm performance may be also observed with the help of its strategic ...

Solution Summary

The expert defines the firms performance and the competitive advantages.