Which option best illustrates a capability?

• A. A patent
• B. Brand name
• C. Cash reserves
• D. The firm's ability to coordinate resources to achieve operational excellence

Answer: (D)

The idea being tested is what distinguishes a capability from a resource in a firm’s strategy. A capability is the firm’s ongoing ability to deploy, integrate, and coordinate its resources through routines, processes, and people to achieve a desired outcome, like operational excellence. The statement about the firm’s ability to coordinate resources to achieve operational excellence best illustrates this concept because it describes an integrated, repeatable capacity—how the firm actually gets things done efficiently across activities.

Patents, brand names, and cash reserves are resources: they provide leverage or protection, liquidity, or identity, but they aren’t, by themselves, the coordinated, repeating ability to run operations smoothly.