Resources Based Strategy

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Understanding Industry Structure

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 Strategy Overview
Vision, Mission, Goals, Opportunities, Threats
Objectives, Values

Strategy Detailed Strategy

Formulation Strategy Implementation

Weakness

Review Assessment Outcome

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Resource Based Strategy

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 QUESTIONS
 What is difference between Resources, Capability and
Competitive Advantage?

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 Resource Based Strategy
 Resource Based Strategy

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Resource Based Strategy

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Knowledge Flow Model

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BUSINESS ORGANIZATION MODEL
 QUESTIONS
 Definition of Capability

Sources of Capability
RESOURCES
PROCESSES
VALUES

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 Resources
 Identifying the Resources
 What opportunity exists for economizing the use of resources

 What are the possibilities for using existing assets more intensely
and in more profitable employment: Corporate acquisition

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 Capability
 Capability as Organizational Routines
 The relationship between resources and capabilities.
 You should try to use your resources to develop capability.

 The trade off between effectiveness and efficiency.

 You can achieve either efficiency (Lower Cost) or Effectiveness (Differentiation)
when developing capability. You can not have both.
 McDonald Example (The food tastes same everywhere, but the new product
introduction takes a long time).

 Economics of experience
 The capability increases over time when the organization executes it repeatedly.

 The complexity of capabilities.

 Some capabilities are very complex in nature. The example being System
Integration Capability of Boeing and Airbus

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 Resource and Capability
 VRIO Analysis for Resources and Capability
 The Question of Value: "Is the firm able to exploit an opportunity
or neutralize an external threat with the resource/capability?“

 The Question of Rarity: "Is control of the resource/capability in the

hands of a relative few?“

 The Question of Imitability: "Is it difficult to imitate, and will there

be significant cost disadvantage to a firm trying to obtain, develop,
or duplicate the resource/capability?“

 The Question of Organization: "Is the firm organized, ready, and

able to exploit the resource/capability?" "Is the firm organized to
capture value?"

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 Resource and Capability
VRIO Analysis for Resources and
Capability

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Resource and Capability

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Value Chain
 Resource Based Strategy
 Resource Based Strategy

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 Competitive Advantage
 Establishing Competitive Advantage
 The capability developed should be Scarce in Market Place.

 The capability should have Relevance in market place.

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 Competitive Advantage
 Evaluating the Rent-Earning Potential: Sustainability
 Durability: (The capability should be Durable in nature to establish
competitive advantage)

 Brand: Retains value for a long time.

 Technology: Depreciates fast.
 Organization culture – Like 3M etc

 Transparency: (The Capability should be difficult to decipher i.e. not

at all Transparent example being System Integration Capability of
Airbus and Boeing

 Information: IBM, Federal Express

 Duplication problem

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 Competitive Advantage
 Evaluating the Rent-Earning Potential: Sustainability

 Transferability: (The capability should be difficult to transfer

example being Reliance Plant in Jamnagar)
 Geographical Immobility: Plant
 Imperfect Information (It is not possible to gather all information about system
integration capability of Boeing and Airbus)
 Firm Specific Resources: Jaguar (Very difficult to create a brand like Jaguar in
short term)
 The immobility of capabilities (The capability of boeing and Airbus is not easy to
transfer to a new organization. Another example maybe Google. One cannot
develop resource like Google, if provided with all resources)

 Replicability: Just in Time

 Some capabilities are very easy to understand theoretically, but very difficult to
replicate. The example being Toyota Just-in-Time system.

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 Competitive Advantage
 Evaluating the Rent-Earning Potential: Appropriability

 The organization should be able to benefit from capability rather

than a vendor or employee etc. The means to achieve it through
points given below
 Property Rights (The organization should take advantage propterty like patents
rather than some employee get its benefit)

 Relative Bargaining Power (The organization should have bargaining power for
knowledge created inside the organization rather than some employee/vendor
get its benefit)

 Embeddness (The knowledge should become embedded in the organization)

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 Competitive Advantage
 Formulating Strategy
 Should be around strategic advantage: Harley Davidson; Image
and Loyalty

 Identifying the Resource Gap and Developing the

Resource Base

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