The Dynamic Capabilities Framework is a strategic management approach that emphasizes the role of managerial and organizational processes in leveraging a firm's capabilities to match and even create market change. It is used to understand how companies can sustain competitive advantage in markets characterized by rapid technological change and intense competition. The framework helps firms to innovate, adapt, and capture new opportunities, thereby achieving and sustaining competitive advantage.
Identify and assess the firm's current resource base and capabilities. | Determine the external market opportunities and threats. | Develop and adapt capabilities to match market changes. | Integrate new functional competencies into the organization. | Reconfigure existing assets and resources to better align with strategic goals.
Continuously evaluate and respond to market trends | Invest in technology and human resources to support capability development | Encourage a culture of innovation and flexibility
Enhances adaptability to changing environments | Supports sustainable competitive advantage | Facilitates strategic alignment with market conditions
Can be complex to implement | Requires continuous investment in capability development | Dependent on high-quality and timely information
In industries experiencing rapid technological changes | When entering new markets or launching new products
In stable, unchanging market conditions | When the organization lacks resources to invest in capability development