Chapter 5: Organizational Strategy

SUSTAINABLE COMPETITIVE ADVANTAGE

 Resources: are the assets, capabilities, processes, employees, information, and knowledge that an
organization controls. They are vital to a company’s strategy because they can help companies create
and sustain an advantage over competitors.
 Competitive Advantage: organizations can achieve this by using their resources to provide greater value
for customers than competitors can.
 Sustainable Competitive Advantage: a competitive advantage become sustainable when other
companies cannot match the value a firm is providing to customers.
o Competitive advantage is “sustained” if competitors have tried and failed to duplicate the
advantage and have for the moment stopped trying to do so.
 VRIO Model: stands for the four questions asked about a resource to determine its value, rarity,
imitability, and organization.
o Valuable resources: allow companies to improve their efficiency and effectiveness. Changes in
customer demand and market can make a once-valuable resources much less valuable. For
competitive advantage to be sustainable, the valuable resource must also be rare.
o Rare resources: resources that are not controlled or possessed by many competing firms – are
necessary in order to sustain a competitive advantage.
o Imperfectly Imitable resources: resources that impossible or extremely costly to duplicate.
 iTunes is basically unique and has retained its competitive lock o the music download
business.
o Valuable, rare, imperfectly imitable resources can produce sustainable competitive advantage
only