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Internal Analysis Vrio

Internal Analysis 1 Why does firm performance differ?
Updated: 30 Aug. 2006 ©Scott Gallagher 2004

Internal Analysis
Earlier we explained differences in firm performance as being a function of their external
environment. However, this is only part of the story. Obviously, each firm has some unique
aspects. Internal analysis is an attempt to explain how and why these internal differences explain
differences in firm performance.

Resources and Capabilities.
Economics generally models firms as generic black boxes that
transform inputs into outputs in an efficient manner. Edith Penrose (1950) is generally credited
with being the first person to model firms as unique bundles of resources. Some individuals like
to make distinctions between resources, what companies have, versus capabilities, things
companies can do. A classic example might be my personal computer. As a resource it is more
powerful than the original computer on the Space Shuttle, however, I could not land......


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Approximate Word Count: 1770
Approximate Pages: 8 (250 words per double-spaced page)

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