Which of the following statements is false?
A dynamic capability is the ability to modify, deepen, or reconfigure the company’s existing resources and capabilities in response to changes in the environment or market.
None of these.
Managers must look toward correcting competitive weaknesses that make the company vulnerable, dampen profitability, or disqualify it from pursuing an attractive opportunity.
A company’s internal strengths should always serve as the basis for its strategy.
Managers need to keep close track of how cost effectively the company can deliver value to customers relative to its competitors.
The correct answer and explanation is :
The correct answer is:
A company’s internal strengths should always serve as the basis for its strategy. ✅ (False statement)
Explanation:
While a company’s internal strengths are undeniably important and can often serve as a foundation for strategic planning, stating that they should “always” be the basis for a company’s strategy is too narrow and potentially misleading. This absolute phrasing makes the statement false because it fails to consider several critical strategic factors, including:
1. Importance of External Environment:
Strategy formulation must balance internal strengths with external opportunities and threats. A company that focuses only on its internal strengths without adapting to changing market dynamics, customer needs, technological shifts, or competitor actions may fail to remain competitive.
2. Role of Weaknesses and Threats:
Just as strengths are valuable, identifying and correcting internal weaknesses and external threats is also essential. A sound strategy often involves mitigating weaknesses that could make the company vulnerable or unfit to pursue certain market opportunities.
3. Dynamic Capabilities Matter:
In a rapidly changing business environment, the ability to modify, reconfigure, and adapt resources — referred to as dynamic capabilities — is critical. Companies that rest on existing strengths without evolving risk being left behind.
4. Value Delivery Relative to Competitors:
A successful strategy should also ensure the company can deliver superior value to customers cost-effectively, compared to competitors. This requires continuous improvement and market orientation, not just reliance on past or present strengths.
Conclusion:
Although internal strengths are important, an effective strategy must be holistic, factoring in external conditions, weaknesses, and evolving capabilities. Therefore, the statement that internal strengths should always be the basis of strategy is false due to its inflexibility and incompleteness.