This chapter discusses analyzing a company's internal organization to understand its resources, capabilities, and core competencies as foundations for competitive advantage. It covers tangible and intangible resources that create organizational capabilities and core competencies. Managers must identify core competencies using criteria like valuable, rare, costly-to-imitate, and nonsubstitutable to focus on capabilities that provide competitive parity or advantage. Tools like value chain analysis and outsourcing can help companies develop and maintain core competencies amid changing business conditions.