What is a capability?

• A. A linked and closely integrated set of competitive assets centered around cross-functional capabilities
• B. The capacity to perform a specific activity
• C. A single asset with value
• D. A random bundle of resources

Answer: (A)

A capability is the organization-wide ability to coordinate resources and routines across functions to perform a set of activities that deliver value. The best description captures that a capability isn’t just one resource or a single task, but a linked and closely integrated bundle of competitive assets and processes that work together across different parts of the firm.

Think of it like a product-development capability: it relies on R&D, marketing insight, manufacturing know‑how, supplier relationships, information systems, and coordination routines that all mesh to bring a product to market efficiently. This integration across functions is what makes the capability hard to imitate and valuable.

The other notions miss that integration. A capacity to perform a specific activity is too narrow, focusing on one task rather than how multiple activities coordinate. A single asset is just a resource, not the coordinated system. A random bundle of resources lacks the deliberate design and cross-functional alignment that define a true capability.