Strategic Management

Professor PD Jose
Professor Rejie George Pallathitta
Professor Sai Yayavaram
Resource Based View Framework (Part-E)

Is the resource non-substitutable? If a firm’s resource cannot be imitated, it may still be subject to
resource substitution. Competitive advantage, therefore, requires the resource to be non-
substitutable. If a firm possesses resources for which no strategically equivalent substitutes exist or
whose advantages cannot be trumped by another resource, the firm is said to possess non-
substitutable resources.

A further requirement for the condition of non-substitutability of resources to be fulfilled is that

firms should be subject to a cost disadvantage if they seek to procure strategically equivalent
resource substitutes. For example, an increasingly important threat which the Swiss watchmakers
are having to address is the growing influence of smartwatches and the changing tastes of younger
and former tech savvy consumers. The positioning of the Swiss watch with the emphasis on old
world luxury and the Swiss made tag while being an inimitable resource may not necessarily
continue to provide a hedge against its rivals.

For the younger and more technologically aware consumers, this may be increasingly be viewed as a
redundant resource, which is being substituted or trumped by a different resource. That is the
technological capability to develop and market smartwatches. There is, therefore, a possibility of the
competitive advantage enjoyed by Swiss watchmakers being eroded owing to the key resource being
substitutable.

And finally, is the resource organizationally exploitable? A resource may be valuable, rare, inimitable,
and non-substitutable, but in order to fully harness the potential of this resource, it needs to be
exploited by the organization. Valuable, rare, inimitable, non-substitutable and exploited resources
by the organization are typically able to provide a sustained competitive advantage. We will use the
example of Walmart to examine how this framework can be used in its entirety next.

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