Competing on resources
As markets move faster and faster, managers complain that strategic planning is too static and too
slow. It explains how a company’s resources drive its performance in a dynamic competitive
environment. Hence the umbrella term academics use to describe this work: the resource based
view of the firm (RBV).
The RBV combines the internal analysis of phenomena within companies (a preoccupation of many
management gurus since the mid-1980s) with the external analysis of the industry and the
competitive environment (the central focus of earlier strategy approaches).
It derives its strength from its ability to explain in clear managerial terms why some competitors are
more profitable than others, how to put the idea of core competence into practice, and how to
develop diversification strategies that make sense.
RBV sees companies as different collection of physical intangible assets and capabilities.
No 2 companies are same becoz they don’t have same set of:
a. Experience
b. Acquired same assets and skills
c. Built on same organizational cultures.
These sets of assets and capabilities determine how efficiently and effectively a company
performs its functions.
Valuable resources can be in many forms:
1. physical: wire
2. intagibles:brand name and technology know-how
3. organizational capabilities
CA whatever may be the source ultimately can be attributed to the ownership of a valuable resource
that enables company to perform better and cheaper than the competitors.
What makes resource valuable?
1. Scarcity
2. Appropriability: Appropriability is the capacity of the firm to retain the added value it creates
for its own benefit. However, who benefits from this added value depends on the decisions
of the firm, the structure of the market in which it operates, and the sources of the added
value itself.
3. Demand
The dynamic interplay of 3 fundamental market forces determine the value of the resource
Resources cannot be evaluated alone but their value is determined in the interplay with market
forces.
A resource that is important in one industry or in particular time may fail to have same values in
other industry.
Andrews defined strategy as the match between what a company can do (organizational strengths
and weaknesses) within the universe of what it might do (environmental opportunities and threats).
As markets move faster and faster, managers complain that strategic planning is too static and too
slow. It explains how a company’s resources drive its performance in a dynamic competitive
environment. Hence the umbrella term academics use to describe this work: the resource based
view of the firm (RBV).
The RBV combines the internal analysis of phenomena within companies (a preoccupation of many
management gurus since the mid-1980s) with the external analysis of the industry and the
competitive environment (the central focus of earlier strategy approaches).
It derives its strength from its ability to explain in clear managerial terms why some competitors are
more profitable than others, how to put the idea of core competence into practice, and how to
develop diversification strategies that make sense.
RBV sees companies as different collection of physical intangible assets and capabilities.
No 2 companies are same becoz they don’t have same set of:
a. Experience
b. Acquired same assets and skills
c. Built on same organizational cultures.
These sets of assets and capabilities determine how efficiently and effectively a company
performs its functions.
Valuable resources can be in many forms:
1. physical: wire
2. intagibles:brand name and technology know-how
3. organizational capabilities
CA whatever may be the source ultimately can be attributed to the ownership of a valuable resource
that enables company to perform better and cheaper than the competitors.
What makes resource valuable?
1. Scarcity
2. Appropriability: Appropriability is the capacity of the firm to retain the added value it creates
for its own benefit. However, who benefits from this added value depends on the decisions
of the firm, the structure of the market in which it operates, and the sources of the added
value itself.
3. Demand
The dynamic interplay of 3 fundamental market forces determine the value of the resource
Resources cannot be evaluated alone but their value is determined in the interplay with market
forces.
A resource that is important in one industry or in particular time may fail to have same values in
other industry.
Andrews defined strategy as the match between what a company can do (organizational strengths
and weaknesses) within the universe of what it might do (environmental opportunities and threats).
