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

Tessel Hotels assesses its capabilities and finds that its online booking system, clean rooms and friendly reception are matched by every competitor, so customers expect them. Its loyalty programme, however, uses data analytics that rivals cannot replicate, and customers value it highly. How should the capabilities be classified under the threshold and distinctive capability distinction?

Booking, cleanliness and reception are threshold capabilities because every competitor has them and customers simply expect them. The analytics-based loyalty programme is a distinctive capability because customers value it and rivals cannot easily replicate it, so it can provide competitive advantage.

  1. ABooking, cleanliness and reception are threshold capabilities; the analytics-based loyalty programme is a distinctive capabilityCorrect
  2. BAll four are distinctive capabilities because each is valued by customers
  3. CBooking, cleanliness and reception are distinctive; the loyalty programme is a threshold capability because it is data-based
  4. DAll four are threshold capabilities because rivals could eventually copy any of them

Explanation

Threshold capabilities are the minimum needed to compete and are matched by rivals. Distinctive capabilities are valued by customers and are hard for competitors to imitate, giving advantage. The loyalty programme meets both tests. Option B ignores the rarity test, and option D wrongly assumes the possibility of eventual copying removes distinctiveness.

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