...The Resource Based View – Jay Barney A firm’s competitive advantage lies in its resources. It exams the link between a firms resource ans sustained competitive advantage. To sustain a competitive advantage it requires that these resources heterogeneous and immobile. The key point of the theory is to identify the firm’s resources and see if it is VRIN (Value, Rarity, In-imitable and Non substitutable) and then protect them. Formal planning is highly imitable and thus cannot be a source of sustained competitive advantage. An argument for heterogeneity is the first mover advantage where the firm may gain access to good distribution channels; develop good reputations before competitors come. Likewise theyre are barriers to entry. How to apply the resource based view: Definitons: It resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge etc. controlled by a firm that will help its efficiency. This will be broken down into human, physical and organization resources. A sustained competitive advantage when it is implementing a value creating strategy not simulteously being implemented by any current or potential competitor and when these other firms are unable to duplicate the benefit of this strategy. Not on calendar time. Critique * Priem and Butlers critique to 1991 paper states it is tautological (it is true in all possible interpretations). That’s its primary assertions are true by definition, and, thus not subject...
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...analysis helps a firm: • determine if its resources and capabilities are likely sources of competitive advantage • establish strategies that will exploit any sources of competitive advantage Traditional research on firm strengths and weaknesses • Theories of distinctive competence – General managers as distinctive competencies – Institutional leadership as a distinctive competence • Ricardian economics • Penrose’s theory of firm growth Research on the skills of general managers, institutional leaders, economic rents and firm growth have been brought together to develop a rigorous model to analyze a firm’s strengths and weaknesses: the resource-based view of the firm The Theory Behind Internal Analysis The Resource-Based View • developed to answer the question: Why do some firms achieve better economic performance than others? • used to help firms achieve competitive advantage and superior economic performance • assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance The Resource-Based View Resources and Capabilities Resources: • tangible and intangible assets of a firm » tangible: factories, products ; intangible: reputation • used to conceive of and implement strategies Capabilities: • a subset of resources that enable a firm to take full advantage of other resources » marketing skill, cooperative relationships The Resource-Based View Four Categories of Resources • Financial (cash, retained earnings) •...
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...VISUAL CONSIDERATIONS Visual considerations should be given prior importance while designing an automobile as it has direct effects on its design and design is supposed to be a very crucial factor as undoubtedly it is the thing that decides whether people are going to like it and buy it or not. With increase in age, there is gradual loss of elasticity in almost all the muscles of the body including muscles of eyes. This reduction in elasticity of the eye muscles lead to inability of the person to focus on an object kept at a distance. This condition gets worse in the situation of dim light or excess light. Along with decreased muscle elasticity, the lens of the eye also become less transparent with increasing age as there is alteration in the chemical composition of the lens (Haigh, 1993). This further poses difficulty in focussing on an object. The ability to focus on a distant object is also affected and reduced by the decrease in elastic property of eye muscles controlling the shape of the lens or the muscles that aid in contraction of lens. Therefore the efficiency of eyes is greatly reduced with increasing age. Ageing also causes changes in the near point of a person. More light is required with increasing age for improved contrast. Nearly double illumination is required for 40 years old people and triple for 60 years old when compared to the young people of about 20 years (Haigh, 1993). The problem of temporary vision impairment caused due to the bright light (glare)...
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...The theory of Industries Organisation and Resource-based view (RBV) has been the most commanding influence in the strategic analysis field for many years. In my opinion, the Barney’s (1991) Resource-Based view is the important factor in gaining competitive advantage for a multinational corporation. In order for a company to have a sustained competitive advantage over a period of time, they need to gain control and fully utilize resources and capabilities that are valuable, rare, inimitable and un-substitutable to the company (Barney and Hesterly, 2012). Basically, the RBV focuses more on the strengths and the weaknesses of the company and try to use the internal resources to ensure superior performance against its competitors. Barney (1991) emphasized three type of internal resources which is the physical, human and organizational capital resources. In today’s globalization, the economy is dynamic and constantly emerging. Madhani (2009) argues that RBV focuses on different types of resources and competencies to attain strategic importance and constantly changing and updating these elements over a period of time to keep competing in the dynamic market place. Managers of the firm need to keep track of the market place and make full use of the existing internal resources to maintain a sustaining competitive advantage. Over time, organizations need to establish a process which allows them to manipulate their services, products, routines and management in parallel with the market...
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...Strategic Marketing and the Resource Based View of the Firm Strategic Marketing and the Resource Based View of the Firm John Fahy University of Limerick Alan Smithee Alloa Metropolitian University John Fahy is Professor of Marketing, Dept. of Management & Marketing, University of Limerick, Limerick, Ireland 353-61-213126 (office), 353-61-338171 (fax) John.Fahy@ul.ie. Alan Smithee is Senior Lecturer in Marketing, Alloa Metropolitian University, Alloa, Scotland. Please address all correspondence to the first author. EXECUTIVE SUMMARY The resource-based view of the firm (RBV) is one of the latest strategic management concepts to be enthusiastically embraced by marketing scholars. This paper argues that the RBV holds much promise as a framework for understanding strategic marketing issues but cautions that, before it is adopted, it needs to be fully understood. Consequently, the paper charts the development of the RBV from its origins in early economic models of imperfect competition, through the work of evolutionary economists to the contributions of strategy and marketing scholars over the past two decades. This broad literature base has given rise to a great deal of ambiguity, inconsistent use of nomenclature and several overlapping classification schema. The paper seeks to draw together common themes of firm heterogeneity, barriers to duplication, sustainable competitive advantage and Ricardian rents within an overall model of resource-based competitive advantage. The second...
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...indicators. Today, Tesco’s strategic strength emanates from its hybrid position on the strategic outlook. The company offers a wide range of branded and own brand products in clean, modern and efficient supermarkets with ample parking and facilities for children and yet appears to offer lower prices (Angwin, Cummings and Smith, 2011, p. 3). The company underpins the low prices with low costs which it enjoys from its buying power. According to the resource-based approach, an organization’s competitive advantage comes from the unique capabilities of its resources which not only define, but also generate an organization’s strategic capacity (Jones & Tilley 2007, p. 124). Resource based theorists like Grant argue that management strategies purporting to maximize opportunities are constrained by imperfections of the market and the fact that not all resources necessary for securing competitive advantage can be found and bought in the markets. Consequently, a firm’s competitive advantage lies in what is unique and embedded in its resources in terms of its core distinctive capabilities (Jones & Tilley 2007, p. 124). Therefore, distinct capabilities inform, mold, shape and generate an organization’s strategic capacity. Ideally, the current Tesco’s key indicators reflect on the company’s responsible behavior in terms of treating the environment, suppliers and buyers, local communities, its customers and the company’s current and future employees positively. Additionally, Tesco refers...
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...definition, positioning is the process by which a brand (a product or service) is marketed with the goal of owning a meaningful and differentiated idea in the mind of the target. Seems simple enough. In practice, very few marketers are able to apply the principles of positioning in order to achieve this goal. Even the fathers of positioning, Jack Trout and Al Ries, do not provide readers of their books the obvious means or steps toward developing an effective positioning strategy. The principles are there, but perhaps not as obvious are how to practice and execute an effective positioning strategy. Enter Innis Maggiore. With more than 35 years' experience applying and executing the principles of positioning, our agency has earned the reputation as the nation's leading agency in the practice of positioning. Our associates are positioning strategists, positionists®, trained in the principles of positioning in order to effectively execute upon our clients' positioning strategies. Jack Trout, a dear friend of the agency, agrees: "Innis Maggiore, like no other agency, has successfully turned the principles laid out in our positioning books and created a disciplined practice. These guys really do get it." Getting the right idea: developing the positioning strategy Most clients and agencies start with the "things." "Build me a website." or "Design me a brochure." Innis Maggiore starts with the business challenge or goal. No one really wants a new logo. Everyone...
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...Tinto: Resource-Based View Introduction Rio Tinto was established in 1873 and 1905. Currently, it is considered as the leading mining and exploration companies in the globe. The companies find, mine and process the mineral resources of the earth – such as metal and minerals that are vital in making thousands of everyday products which meet the needs of the society and contribute to the improve standard of living. The activities of the companies span the world with production from every continent. The companies are offering products such as aluminum, copper, diamonds, energy products, gold, industrial minerals and iron ore (Rio Tinto, n.d.). Rio Tinto is a contemporary business which is committed in serving all of its stakeholders. Thus, in all of its activities, the company follows the very best practice in terms of safety, ethical business, social and environmental responsibility, together with sustainable development (Rio Tinto, n.d.). The main objective of the company is to maximize profit towards its investors by operating in responsible manner and in sustainable manner in the process of finding, mining and processing minerals – areas of expertise in which the Group has a competitive edge. The strategy of Rio Tinto focuses investing in large, long life and cost competitive advantage driven by the quality of opportunity, not choice of commodity (Rio Tinto, n.d.). The Resource-Based The resource-based view (RBV)...
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...competitive advantage and take advantage of profitability, it must be able to exploit and build upon its strengths and eliminate its weaknesses. Competencies for business are its resources and capabilities that allow the business to differentiate itself and its products and services, or reduce costs when compared to competitors (“The competitive advantage”, n.d). Assets can be tangible like equipment, land or technology, or intangible like brand, knowledge and expertise. When assets are utilized appropriately, they add value to output produced by the business. Similarly capabilities of the business, like skills, processes and structures are important to creating competitive advantage. Along with internal analysis managers must conduct SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses make up business’s internal analysis and opportunities and threats come from external environment of the firm and hence form external analysis. RESOURCES BASED VIEW FOR KRAFT FOODS Kraft Foods is one of the largest Food and Beverage Company in North America with presence in more than 155 countries. Kraft has a deep portfolio of consumer’s favorite food, beverage, cheese, refrigerated meals and grocery brands (“Our Mission”, n.d). Tangible Resources * Physical Resources Kraft Foods has presence in more than 150 countries including 35 manufacturing centers and 3 research and development centers. This shows the extent of capital base of the...
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...Procurement is An Integral Part of Resource- Based View of An Organization Phuong Duong University College Dublin (12251697) 4112 words ABSTRACT Procurement has become an increasingly widespread practice among organizations and is today of strategic importance that attract great interest from scholars in the literature. The primary purpose of the paper is to contribute with a review of leading studies that analyze procurement from the resource-‐based view of the organization. The paper begins by setting out the business environment of procurement and then presents the development and propensity of procurement. This is followed by a review of principal works and differences of perspectives of resource-‐based view. The next section contains an analysis of the relationship between procurement and resource-‐based theory and discusses empirical works on ...
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...Compare and contrast the market-based approach and the resource-based view as approaches to competitive strategy. To what extent are they rival or complementary views? Competitive strategy, after Porter, came to be defined as the strategy of a business unit which seeks to achieve sustainable Competitive Advantage (SCA). The literature on strategy deems the market-based view (MBV) and the resource –based view (RBV) as two approaches to giving businesses the competitive edge they need to compete in their industries. Aside from having competitive advantage as their ultimate goal, the two approaches are also similar in the sense that they both make use of particular tools and models in their undertakings. They also differ in numerous ways, starting with their definitions, assumptions about the equilibrium of the market and the tools and models used. Nevertheless, despite their differences which may portray them as rivals, in practice the two approaches are rather complementary as the crux of this essay shall illustrate. By definition the market-based view is an outside in approach to competitive strategy; which as stated by D. Faulkner (2007) copes with competition through ‘astute market positioning’. In other words firms identify the opportunities and threats in their external environment through the use of tools such as the Product Life Cycle, Porter’s 5 Forces Model of industry analysis, Strategic groups, Scenario planning and models namely Porter’s Generic Strategies, Customer...
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...and Management Vol. 5, No. 12; December 2010 Impact of Resource Based View and Resource Dependence Theory on Strategic Decision Making Ali Raza Nemati Riphah International University, Islamabad, Pakistan Tel: 92-345-590-5581 E-mail: aliraza.nemati@riphah.edu.pk Afkar Majeed Bhatti Riphah International University, Islamabad, Pakistan Tel: 92-333-535-9743 E-mail: Afkar_tg@yahoo.com Muhammad Maqsal Riphah International University, Islamabad, Pakistan Tel: 92-345-956-5435 E-mail: mmaqsal@gmail.com Immad Mansoor Riphah International University, Islamabad, Pakistan Tel: 92-345-580-0451 E-mail: immadmansoor@gmail.com Fariha Naveed Riphah International University, Islamabad, Pakistan E-mail: farihanaveed@riphah.edu.pk Abstract This paper aims to investigate different factors determining strategic Decision making. This study attempts to identify the role of RBV and RDT and its impact on strategic Decision making. It has been seen that different strategies has to be made to get competitive advantage keeping in mind external resources and while strategies differ when to get competitive advantage through internal resources such as Human resource and capital Resource. In this research heuristics and bounded rationality acted as moderator to strategic decision making as when decision makers (managers take decisions personal biases and heuristics also get involved. Keywords: Decision making, Resource based view, Resource dependence theory, Heuristics and biases 1. Introduction The...
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...firm, how a firm can operate most efficiently and what has to be considered to generate sustainable success. For me personally the topic “resourced-based view of a company” was the most interesting one. Therefore, I was wondering if it is possible to apply a resource-based view as an innovative perspective to support the strategic decision making process of certain management sections. During this research proposal I am going to present my research strategy to answer this question. 2. Literature Review In order to prove the value of the research question a review of the relevant literature was undertaken. Obviously, the central element of my research question is “the resource-based view” (RBV). Therefore, I disclose which initial assumptions, approaches and results have been evolved about the RBV thematic in literature. The findings about the development of the concept are introduced chronologically. Moreover, a dissertation about a closely related topic to my research question is presented. As for every major business concept, there exist countless definitions about the RBV. A concise and covering one might be: “A management device used to assess the available amount of a business' strategic assets. In essence, the resource-based view is based on the idea that the effective and efficient application of all useful resources that the company can muster helps to determine its competitive advantage.” (Businessdictionary) One of the first significant citations about the RBV...
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...Drawing on the Resource Based View literature, evaluate whether and how Zara generates sustainable competitive advantage Based upon the analysis of the ‘ZARA: Fast Fashion’ case study and referring to literature on the resource based view along with other appropriate theory and frameworks, I will draw a conclusion as to whether Zara have been able to create a sustainable competitive advantage, focussing primarily on their core competences developed over time. The resource based view stems from the idea that today’s market environments are so unpredictable and fast moving that it is wiser to form a base for strategy on the internal resources and capabilities of a company, rather than focussing on the external market (Grant, 2008). To gain a competitive advantage a firm must implement a strategy consisting of valuable and rare resources not being employed by current or potential competitors. To create a sustainable competitive advantage a firm must have unique resources that are non-imitable and non-substitutable (Barney, 1991). Competences derive from the integration of resources, assets, routines and values (Prahalad and Hamel, 1990). They become ‘core’ competences when they strategically differentiate themselves from other organizations (Leonard-Barton, 1992), helping them build a sustainable competitive advantage. Prahalad and Hamel (1990) state that a world leading company is unlikely to have more than five or six core competences and it is crucial to note that, while...
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...Drawing on the Resource Based View literature, evaluate whether and how Zara generates sustainable competitive advantage. A firm is said to have competitive advantage when its profits exceed the average of its industry and that of its rivals (Grant, 1991). According to Grant (1991) the RBV sees organizations as a collection of resources which when combined forms organizational capabilities. The goal of every business strategy is to achieve a sustainable competitive advantage. According to Collis and Montgomery (2008) a firm’s resources are responsible for its better performance while working in a dynamic environment which academics term as resource based view of the firm (RBV). The RBV analysis assumes that both resources and capabilities are important for better performance and explains why some firms perform better than others in an industry. Using RBV as a framework this essay aims to examine how ZARA generates sustainable competitive advantage. (Opening is good, you have been able to introduce theory that would be discussed the essay). “A fast fashion system combines quick response production capabilities with enhanced product design capabilities to both design latest products that capture the latest consumer trends and exploit minimal production lead times to match supply with uncertain demand” (Cachon and Swinney, 2011). Fast fashion is widely gaining recognition as being a key enabler for success for modern fashion retailers (Barnes and Lea-Greenwood, 2006). Fashion...
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