The ability of a firm achieving a good level of profit thanks to its resources and capabilities depends on:
A)Many factors in addition to the firm's competences
B)The ability of top managers to effectively and efficiently guide the firm through the strategic management process
C)Its ability to use them to establish and to sustain, competitive advantage and to appropriate the returns by deploying its competitive advantage
D)Its ability to perform better than its rivals, to extract more value than similar firms in the same strategic group, and to distribute the value to its stakeholders

Question

Quizplus · Accepted Answer

The ability of a firm achieving a good level of profit depends on its ability to establish and sustain competitive advantage and to appropriate the returns by deploying its competitive advantage. This is the essence of the resource-based view of the firm, which suggests that a firm's resources and capabilities are the primary sources of its profitability and success. Factors beyond the firm's competences may also have an impact, but ultimately it is the firm's ability to leverage its unique resources and capabilities that drive its profitability. Top management plays an important role in guiding the firm through this process, but alone cannot guarantee success. The ability to perform better than rivals and distribute value to stakeholders is a consequence of successfully leveraging resources and capabilities to gain competitive advantage.

The Ability of a Firm Achieving a Good Level of Profit