| Summary: | To produce maximum profits, a firm is constrained by resource scarcity.
Thus, optimal resource allocation is essential in order to realize optimal returns.
Firms have to make choices of how to use their scarce resources to make
maximum profits by using minimum costs. Firms instituted these choices into
their organizations in the forms of mission, vision, and competitive strategy.
Firms can use their resources and capabilities as foundations to develop
their mission, vision, and strategy. Firms� resources and capabilities are the
sources of advantage and profitability, thus offer a better foundation as a source of
direction than an externally focused orientation. Resources and capabilities which
are valuable, rare, inimitable, and well-organized by a firm, can act as a resource
of sustainable competitive advantage and above average economic returns
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