What Are the Determinants of the Potential for Resources and Capabilities

question 23

Essay

What are the determinants of the potential for resources and capabilities to generate profits?

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Definitions:

Normal Profits

The level of profit that is necessary for a business to remain competitive in the market, typically equal to the opportunity cost of the capital employed.

Plant Size

The capacity or physical dimensions of a facility where goods are manufactured or processed.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at different price levels.

Plant Capacities

The maximum amount of products or services that a facility can produce over a given period of time under normal operating conditions.