Resources Based

View

Implemented by Group 5:

Ihab Moustafa Ibrahim (20221429)

Eslam Samir Elsbaaei (19222107)
Eslam Al Sayad (18225377)
Presented to:
Khaled Elkhateeb (20221421)
Dr. Ashraf Labib
Moamed Talha (20221242)
 Resource Based View
(RBV) Model
CONTENT
o Definition of Resource Based View
o Concept of Resource Based View
o VRIO Framework
o Importance of Resource Based View
o Critiques of Resource Based View
Definition of Resource Based View
 The resource-based view (RBV) is a model that sees
resources as key to superior firm performance.

 The resource-based view (RBV) is a managerial What makes your business

framework used to determine the strategic resources unique?????
a firm can exploit to achieve sustainable competitive
advantage.

 The RBV focuses managerial attention on the firm's

internal resources in an effort to identify those assets,
capabilities and competencies with the potential to
deliver superior competitive advantages.
Concept of Resource Based View

• RBV is an approach to achieving competitive

advantage that emerged in 1980s and 1990s, after
the major works published by Wernerfelt, B.,
Prahalad and Hamel, Barney, J. and others.

• The supporters of this view argue that organizations

should look inside the company to find the sources
of competitive advantage instead of looking at
competitive environment for it.

• The following model explains RBV and emphasizes

the key points of it.
Resource-Based View (RBV)
Concept of Resource Based View
 According to RBV proponents, it is much
more feasible to exploit external
opportunities using existing resources in a
new way rather than trying to acquire
new skills for each different opportunity.
 In RBV model, resources are given the
major role in helping companies to
achieve higher organizational
performance. There are two types of
resources: tangible and intangible.
 The two critical assumptions of RBV are
that resources must also be
heterogeneous and immobile.
tangible
• They are physical things.
Land, buildings, machinery,
equipment and capital – all
these assets are tangible.
• Physical resources can easily
be bought in the market so
they confer little advantage
to the companies in the long
run because rivals can soon
acquire the identical assets.
Resources
intangible
• They are everything else that has
no physical presence but can still
be owned by the company.
• Brand reputation, trademarks,
intellectual property are all
intangible assets.
• Unlike physical resources, brand
reputation is built over a long time
and is something that other
companies cannot buy from the
market.
• Intangible resources usually stay
within a company and are the
main source of sustainable
competitive advantage.
Concept of Resource Based View Resources

Heterogeneous Immobile
 The first assumption is that skills, capabilities and other resources that
organizations possess differ from one company to another.  The second assumption of RBV is
that resources are not mobile and
 If organizations would have the same amount and mix of resources, do not move from company to
they could not employ different strategies to outcompete each other. company, at least in short-run.

 What one company would do, the other could simply follow and no  Due to this immobility, companies
competitive advantage could be achieved. cannot replicate rivals’ resources
and implement the same strategies.
 This is the scenario of perfect competition, yet real world markets are
far from perfectly competitive and some companies, which are exposed  Intangible resources, such as brand
to the same external and competitive forces (same external conditions), equity, processes, knowledge or
are able to implement different strategies and outperform each other. intellectual property are usually
immobile.
 Therefore, RBV assumes that companies achieve competitive advantage
by using their different bundles of resources.

 This is the same as competition between Apple Inc. and Samsung

Electronics
 VIRO Matrix

 Although, having heterogeneous and immobile resources is critical in achieving competitive

advantage, it is not enough alone if the firm wants to sustain it.

 Barney (1991) has identified VRIN framework that examines if resources:

valuable, rare, costly to imitate and non-substitutable.

 The resources and capabilities that answer yes to all the questions are the sustained competitive
advantages.

 The framework was later improved from VRIN to VRIO by adding the following question:
“Is a company organized to exploit these resources?”
VIRO Matrix
VIRO Matrix
VIRO Matrix

 If resources help organizations to increase the value offered to the

customers ?

Value:  This is done by increasing differentiation or/and decreasing the costs of the
production.

 The resources that couldn’t meet this condition, lead to competitive

disadvantage.

 Resources that can only be acquired by one or few companies are

considered rare.
Rarity:
 When more than few companies have the same resource or capability, it
results in competitive parity.
VIRO Matrix

 A company that has valuable and rare resource can achieve at least
temporary competitive advantage.

Imitability:  However, the resource must also be costly to imitate or to substitute for a
rival, if a company wants to achieve sustained competitive advantage.

 The resources itself do not confer any advantage for a company if it’s not
organized to capture the value from them.

Organization:
 Only the firm that is capable to exploit the valuable, rare and imitable
resources can achieve sustained competitive advantage.
Importance of RBV

Importance of Resource-based View

The resource-based view strategy aims to gain a sustainable competitive advantage. An organization can sustain
its competitive advantage only through an extensive resource analysis, resource allocation, and cross-functional
resource usage. Likewise, only when a company unleashes its workforce’s true potential can it innovate better
and stand out in the industry.

An RBV strategy helps organizations achieve:

•Visibility for efficient resource allocation
•Maintain competitive advantage
•Cross-functional resource usage
Importance of RBV

1- Visibility for efficient resource allocation

The comprehensive view of all the resource pools facilitates managers to gain insight into resource skills and
competencies. This, in turn, allows managers to allocate resources as per the scope and market demand of its products
and services. Real-time information helps them make data-driven decisions, leverage talent to the maximum potential,
and maximize profitability.

2- Maintains the competitive advantage

The rise in market volatility propels extensive ad hoc customer demands. Responsiveness to changing marketplace
conditions often becomes the deciding factor for a company’s growth and success. In these situations, managers can
utilize both their tangible and intangible assets to execute critical strategic responses. An RBV of strategy enables
demand fulfillment to sustain a company’s competitive advantage.

3- Cross-functional resource usage

In a matrix organization, the resource-based strategy model facilitates enterprise-wide visibility of the workforce and its
expertise. It helps in allocating appropriate resources from different departments and form a cross-functional team to
execute the project. It reduces hiring cycle costs and also helps to leverage the diversified workforce. Besides,
employees are also given multi-faceted projects to work on enhancing their professional portfolio.
Importance of RBV

Different resource configurations can generate the same value for firms and thus would not be competitive
advantage

The role of product markets is underdeveloped in the argument

The theory has limited prescriptive implications.

The failure to consider factors surrounding resources; that is, an assumption that they simply exist, rather than a
critical investigation of how key capabilities are acquired or developed

It is perhaps difficult (if not impossible) to find a resource which satisfies all of criteria.

An assumption that a firm can be profitable in a highly competitive market as long as it can exploit advantageous
resources does not always hold true.
It ignores external factors concerning the industry as a whole; Porter’s Industry Structure Analysis ought also be
considered.