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ACCA Strategic Professional · Strategic Business Leader · The internal resources, capabilities and competences of an organisation

Calder Pharma's board states that its research culture is its core competence. The culture arose from decades of decisions by many staff, and managers cannot say exactly which routines produce results. Rivals who hired Calder's scientists failed to reproduce the outcomes. Which concept best explains why the advantage is sustainable, and what is the strategic risk?

Causal ambiguity and path dependency explain why rivals cannot copy the culture, even by hiring staff. The risk is that Calder itself does not understand the source, so it is hard to manage, replicate, or adapt, and may become a rigidity.

  1. ACausal ambiguity and path dependency protect it from imitation, but the same opacity makes it hard for Calder to manage or transferCorrect
  2. BEconomies of scale protect it, and the risk is overcapacity
  3. CPatent protection prevents imitation, and the risk is patent expiry
  4. DLow switching costs protect it, and the risk is customer defection

Explanation

When the link between routines and outcomes is unclear and the advantage is built over time, rivals cannot copy it: causal ambiguity and path dependency. The same opacity means Calder cannot easily manage, replicate or redeploy it, and it may become a core rigidity. The other options rely on factors not in the case.

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