Analyzing Resources

and Capabilities

Chapter 5
INTRODUCTI
ON
• Analysts have tended to define assets too narrowly,
identifying only those that can be measured, such as
plant and equipment.
• Yet the intangible assets, such as a particular
technology, accumulated consumer information,
brand name, reputation, and corporate culture, are
invaluable to the firm’s competitive power.
• In fact, these invisible assets are often the only real
source of competitive edge that can be sustained
over time.

• —HIROYUKI ITAMI, MOBILIZING INVISIBLE ASSETS

• From the Working Girl Movie
After this chapter, we should be able to:

• ◆ appreciate the role of a firm’s resources and capabilities as a basis for

• formulating strategy;
• ◆ identify and appraise the resources and capabilities of a firm;
• ◆ evaluate the potential for a firm’s resources and capabilities to confer
• sustainable competitive advantage;
• ◆ use the results of resource and capability analysis to formulate strategies that
• exploit internal strengths while defending against internal weaknesses.
Switch from External to Internal factors

• Strategy is concerned with matching a firm’s resources and capabilities to the

opportunities that arise in the external environment.
• So far, the emphasis has been on the identification of profit opportunities in the
external environment of the firm.
• In this chapter, our emphasis shifts from the interface between strategy and the
external environment towards the interface between strategy and the internal
environment of the firm.!
Basing Strategy on Resources and
Capabilities -Resource-Based View ( 1990-s)

• Based on the
• -Mission & Vision ( GOALS)
• - Resources and Capabilities

• STRATEGY DESIGN
• -Interface with the environment
Some Examples: Honda, Canon
& 3M
• Honda Motor Company: No.1 motorcycle producer and a Leading
supplier of automobiles but it has never defined itself either as a
motorcycle company or a motor vehicle company.

• Since its founding in 1948, its strategy has been built around its
expertise in the development and manufacture of engines;
• this capability has successfully carried it from motorcycles to a wide
range of gasoline engines
Some Examples: Canon & 3M
• Canon Inc. had its first success “35 mm cameras”. Since then: fax
machines, calculators, copy machines, printers, video, cameras,
camcorders
• Almost all of Canon’s products involve the application of three areas of
technological capability:
• 1) precision mechanics,
• 2) microelectronics and
• 3) fine optics.
• 3M Corporation – Capability to launch new products: Its product list
• now comprises over 30 000 products. Is it a conglomerate?
 • Two major sources of
superior profitability (In
Resources and Chapter 1)
Capabilities as • 1) Industry attractiveness &
Sources of • 2) Competitive advantage!
• .Internationalization and
Profit deregulation have increased
competitive pressure within
most sectors; as a result, few
industries (or segments)
offer cozy refuges from the
• COMPETITVE ADVANTAGE IS
vigorous competition!
• Hence, establishing
competitive advantage
through the development
and deployment of
resources and capabilities,
rather than seeking shelter
from the storm of
competition, has become
the primary goal for
strategy!
THE SOURCE OF PROFIT!!!
 • Two major sources of • Hence, establishing
superior profitability (In competitive advantage
ONCE AGAIN- Chapter 1) through the development and
deployment of resources and
COMPETITIVE • 1) Industry
capabilities, rather than
attractiveness &
ADVANTAGE seeking shelter from the storm
• 2) Competitive of competition, has become
IS THE MAIN advantage! the primary goal for strategy!
SOURCE OF
PROFIT!!
Historical Comparisons 1

Monopolistic profit – based Profit from superior It is important to

on competitive and market resources (Ricardian rent is differentiate profit from
power a surplus earning above the market power and profit
costs) from resource superiority
 Distinguishing Porter’s five forces
between profit from framework suggests
market power and that industry
profit from resource attractiveness derives
superiority is less ultimately from the
clear in practice than ownership of
in principle. resources.
Historical
Comparisons 2 Barriers to entry, are Monopoly is usually
the result of patents, based on the
brands, distribution ownership of a key
channels, learning, or resource such as a
another source of technical standard or
incumbent firms. government license
 This chapter outlines a resource-based
approach to strategy formulation.

END OF THE Fundamental to this approach is a thorough

INTRODUCTI and profound understanding of the resources
and capabilities of a firm.
ON
It provides a basis for selecting a strategy that
exploits key resource and capability strengths
of an organization—or an individual
The Resources of the Firm
 Resources • 1) Resources are the
productive assets owned by
& Capabilities the firm individual resources
do not confer a competitive
advantage;
2) Capabilities are what
the firm can do with the
resources
• It is a capability that is the
essence of superior
performance.
Resources & Capabilities
It is important to distinguish between the resources and
the capabilities of the firm!

• 1) Resources are the productive assets owned by the firm individual

resources do not confer a competitive advantage;
• 2) They must work together to create organizational capability – an
example of surgery!
Capabilities are
• 3) Drawing up an inventory of a firm’s resources can be surprisingly what the firm
difficult.
• No such document exists within the accounting or management
can do!
information systems of most corporations.
• The corporate balance sheet provides a limited view of a firm’s
• It is capability
resources—it comprises mainly financial and physical resources. that is the
• To take a wider view of a firm’s resources it is helpful to identify
three principal types of resources:
essence of
• Tangible, superior
• Intangible, and
• Human resources.
performance.
I. TANGIBLE ASSETS –
The Easisest to evaluate – Like profit is the easiest measurement
• But we must understand their value for building
competitive advantage:
• For instance, a small savings bank has 1 mil$ in
fixed assets making 80% of the total assets?
• Is it much, or is it not enough?
• But if we know that the primary business is
“lending” then this structure of assets is actually
very bad!
• Once we have fuller information on a company’s
tangible resources we explore how we can create
additional value from them. This requires that we
address two
• Кey questions are ●
• What opportunities exist for economizing on their use?
• It may be possible to use fewer resources to support the same
level of business, or to use the existing resources to support a
larger volume of business.
• In the case of our Savings Bank – maybe they can sell ½ or
lease ½ and be more profitable.
• ● What are the possibilities for employing existing assets more
profitably?
Maybe
• lease ½ or
• lease as ”office per day”
or some sort of “coworking space”
Or offer to VC – s as a partnership for a Business Accelerator?
II. INTANGIBLE ASSETS

For most companies, intangible resources are more valuable than tangible resources.
Yet, in company financial statements, intangible resources remain largely invisible—
particularly in the U.S. where R&D is expensed.
The exclusion or undervaluation of intangible resources is a major reason for the large and growing
divergence between companies’ balance-sheet valuations (“book values”) and their stock-market
valuations (Table 5.1)
Among the most important of these undervalued or unvalued intangible resources are brand names.
• Brand names and other trademarks are a form of reputational asset: their value is in the confidence
they instill in customers.
• Different approaches can be used to estimate brand value (or “brand equity”). One method takes the
price premium attributable to a brand, multiplies it by the brand’s annual sales volume, then calculates
the present
Shift in The Most Valuable Brands 2008 / 2020
https://howmuch.net/articles/top-100-most-valuable-brands-2
020
2020 by regions: North America & Europe
How are brands valuated?
The brand valuations in are based upon the operating profits for each company (after taxation and a
capital charge), estimating the proportion attributable to the brand, then capitalizing these returns.

The value of a company’s brands can be increased by extending the range of products over which a
company markets its brands. Johnson & Johnson, Samsung, and General Electric derive considerable
economies from applying a single brand to a wide range of products.
As a result, companies that succeed in building strong consumer brands have a powerful incentive to
diversify—for example, Nike’s diversification from athletic shoes into apparel and sports equipment.

Like reputation, technology is an intangible asset whose value is not evident from most companies’
balance sheets. Intellectual property—patents, copyrights, trade secrets, and trademarks—comprise
technological and artistic resources where ownership is defined in law.
Since the 1980s, companies have become more attentive to the value of their intellectual property. For
IBM (with the world’s biggest patent portfolio) and Qualcomm (with its patents relating to CDMA digital
wireless telephony), intellectual property is the most valuable resource that they own.
The Importance of Patents for
Technological firms ( even in bancrupcy)
• In 2011 Motorola was aquired IN 2019, NOKIA HAD THE 2ND HIGHEST
by Google mainly because of its NUMBER OF GRANTED 5G PATENT
FAMILIES
patent base
• Motorola acquisition means
Google gets 17,000 patents, 3
times Nortel’s, with 7,500
pending.
• “So Google has acquired
Motorola’s mobile phone
business for a whopping $12.5
billion. Things just got very
interesting in the Google, Apple
and Microsoft battle.”
 The firm’s HR comprise the
III. HUMAN 1) expertise and
RESOURCE 2) effort offered by
employees.
S Like intangible resources, human
resources do not appear on the
firm’s balance sheet—for the
simple reason that the firm does
not own its employees; it
purchases their services under
employment contacts
-this is over simplistic and quite
vulgar approach
• HR are relatively stabile
resources Employees are
free to move but in
practice contracts are long
term.
• Danger of turnover and
absenteeism
• The average length of
time:
• U.S. – 4 years
• Greece – 10 years
• Britain – 13 years
III. HUMAN RESOURCES..Cont’d
• HR practices have • Competency modeling involves identifying the set of skills, content knowledge,
IMRPOVED and attitudes, and values associated with superior performers within a particular job
become MORE category, then assessing each employee against that profile.
SOPHISTICATED • HR competencies – the critical role of psychological and social aptitudes in
after 1990 determining superior performance:
• -Selection process • typically these factors outweigh technical skills and educational and professional
qualifications.
• -Evaluation process
• Recent interest in emotional intelligence reflects growing
• -Introduction of
• recognition of these psychological and social attributes.1
360 degrees
evaluation • A growing trend among companies to “hire for attitude; train for skills.
III. HUMAN RESPURCES..Cont’d
• The ability of employees to harmonize their efforts and
integrate their separate skills depends not only on their
interpersonal skills but also the organizational context.
• This organizational context is determined by a key intangible
resource: the culture of the organization.
Jay Barney identifies OC as a firm resource of great strategic
importance that is potentially very valuable,

Bojadjiev: “Organizational Culture is an unwritten system of

values and norms that determines interactions, behaviors,
decision making and processes within the organizations.”
HUMANITY TOUCH – RESHAPING THE CULTURE

• Humanity Touch is an NGO based in the city of Kansas. Established back in 2001, it mission was “ to provide support for the
education of those in need through volunteers help”.

• So, it gathered volunteers from various disciplines, engineers, MD-s, lawyers as well as professionals with a degree in liberal arts or
with business degrees, willing to serve as volunteers.

• Their primary task was to dedicate at least two hours weekly, mentoring children from inner communities – who had problems
getting passing grades in school.

• Administrative staff included Dan Leland, president, his aide Mrs. Carlson, and four “account managers” as they were called, i.e.
young ladies who were in charge of their “accounts”: each of them was coordinating a group of courses – usually 10 of them.

• Their job description included staff like: scheduling the courses, providing teaching materials for the kids (as assigned by volunteers)
, spreading information if something is rescheduled, and thus like.

• The organizational culture of Humanity Touch accepted a casual dress code, addressing everyone by their first name, and having
flexible work hours – as long as the job is done.

• HT was funded by endowments from businesses and more affluent individuals. Few of them were sitting on the Board of Trustees.
HUMANITY TOUCH – RESHAPING THE
CULTURE 2
• 2008

• Escalation of financial crisis moved the Board to consider enlarging the scope of activities. More and more people were
let off their jobs, and they needed additional training – to get additional skills, and eventually to improve their chances to get a
job.

• So, the Board decided to move HT in more formal educational sphere and to transform it to certified vocational school.

• The Board had initially provided funding for this “shift” and eventually reflected on other business, who might be keen
to support HT.

• With a new mission, which was now set as : We provide new horizons via expanding your skills” , The Board has also
asked Mr. Leland, to reshape the culture from informal to more formal. One of the main concerns was how to implement a formal
dress code. Both board members, and Mr. Leland, knew that now they have to enlarge funding and contact much more business
and individuals. They were eager to reshape the dress code from “casual” into “business formal”.

• With young ladies, aged 19-20, Mr. Leland knew that this is not going to be an easy task.
HUMANITY TOUCH – RESHAPING THE
CULTURE 3
• And it wasn’t. Dan purchased formal “grey flannel business suites” and asked the account managers to wear them as a
part of the “new dress code”.

• And they did. For a day, or two. Then, some of them would miss a day, or two. Eventually, in a few weeks, no one was
wearing business skirts and jackets. Potential donors were being scheduled every day, and they didn’t seem to be happy
what the “first impression” about HT.

• The Board members were even less happy. For not having the policies enforced, and even more, for having a President
who couldn’t deliver.

• The funds were draining, and they were putting blame on Mr. Leland and his “account managers” for being too casual.

• Dan wondered, what to do. Even more, How to do it?

• You are a management consultant!

• What would you suggest to Dan?

Reinforcement Theory for Organizational Learning
• Positive Reinforcement - Used to increase
desired behavior. It consists of making certain
that positive behaviors are reinforced with
positive rewards.
• Negative reinforcement - Used to increase
the desired behavior. This involves placing
negative consequences on failure to perform
the desired behavior.
• If you get an F you will not be aloud to play
with the children
• Extinction - Used to reduce undesirable
behavior.
• Punishment -
• Used to reduce undesirable behavior.
• What is Reinforcement Theory?
• Reinforcement theory was first
recognized in the work of psychologist
Ivan Pavlov (behavioral conditioning)
and B. F. Skinner (operant
conditioning).
• Reinforcement theory says that
behavior is driven by its consequences.
As such, positive behaviors should be
rewarded positively. Negative
behaviors should not be rewarded or
should be punished.
• The difficulty in employing this theory
is that it is not always easy to
determine what types of behavior
should be rewarded.
Routinization – Reinforcement theories
The Linkage between Resources and Capabilities
– Need to Align the Formal and Informal
• The coordination needed for organizational capability also requires appropriate
management systems.
• These include information systems to allow each organizational member to identify
changing circumstances and the actions of coworkers, and incentive systems to
promote cooperation and effort.
• The weaknesses in teaching capabilities that I detect at several of the universities
that I visit may
• reflect, first, the fact that the career-advancement incentives available to professors
• are heavily weighted towards research and, second, teaching incentives are almost
• wholly linked to individual performance—there is little inducement to collaboration.
ОRGANIZATIONAL CAPABILITIES

• Resources are not productive on their own.

• A brain surgeon is close to useless without a radiologist,

anesthetist, nurses, surgical instruments, imaging equipment
and a host of other resources.
• To perform a task, a team of resources must work together.
• An organizational capability is a “firm’s capacity to deploy
resources for a desired end results.”
ОRGANIZATIONAL CAPABILITIES

• Just as an individual may be capable of playing the violin s/he needs an orchestra to perform
• An organization may possess the capabilities needed to manufacture widgets, distribute them
globally and hedge the resulting foreign exchange exposure.
• Our primary interest is in those capabilities that can provide a basis for competitive advantage.

• Core competencies, according to Hamel and Prahalad, are those that:

1. make a disproportionate contribution to ultimate customer value, or to the efficiency and
2. provide a basis for entering new markets

• .
ОRGANIZATIONAL CAPABILITIES…
Cont’d
• Prahalad and Hamel criticize U.S. companies for emphasizing product management over
competence management.

• They compare the strategic development of Sony and RCA in consumer electronics
• Both companies were failures in the home video market. RCA introduced its videodisk
system, and Sony its Betamax videotape system.

• For RCA, the failure of its first product marked the end of its venture into home video
systems and heralded a progressive retreat from the consumer electronics industry. RCA
was acquired by GE and later sold to Thomson of France
• Sony, on the other hand, acknowledged the failure of Betamax but continued to develop its
capabilities in video technology and produced a string of successful video products
including camcorders, digital cameras, and the PlayStation game console.
Classifying Capabilities

• Before focusing upon “distinctive” or “core” capabilities, it is helpful

to take a comprehensive look at the full range of an organization’s
capabilities. To identify a firm’s capabilities, we need to have some
basis for classifying and disaggregating its activities.
• Two approaches are commonly used:
• 1) A functional analysis identifies organizational capabilities in
relation to each of the principal functional areas of the firm…and
2) A value-chain analysis
Classifying Capabilities…Cont’d
• A value-chain analysis separates the
activities of the firm into a sequential
chain.
• Michael Porter’s representation of the
value chain distinguishes between
• A) primary activities (those involved
with the transformation of inputs and
interface with the customer) and
• B) support activities
• Porter’s generic value chain
identifies a few broadly defined
activities that can be
disaggregated to provide a more
detailed identification of the
firm.
• Thus, marketing might include
market research, test marketing,
advertising, promotion, pricing,
and dealer relations.
The Nature of Capability
The Nature of Capability

• Identifying and drawing up an inventory of a firm’s resources is fairly

straightforward.
• Organizational capabilities pose greater problems—they are much
more elusive.
• Apple’s distinctive capability in the design of consumer electronic
products that combine pleasing aesthetics with a superior user
interface is evident from its iMac, iPod, and iPhone products—but
where within Apple is this capability located? To better understand
organizational capabilities, let us take a look at their structure.
Capability as
Process and Routine Hierarchy of Capabilities

• But how does this integration occur?

• Productive activity within an
organization involves coordinated
actions undertaken by teams of
people engaged in a series of
productive tasks.
• We refer to the sequence of actions
through which a specific task is
performed as an organizational
process. It is through the adaptation
and replication of routines that firms
develop. Like individual skills,
organizational routines develop
through learning by doing.
Appraising Resources and
Capabilities

• For a resource or capability to establish a • Relevance.

competitive advantage, two conditions
• must be present:
• ● Scarcity. –If a resource or capability is
widely available within the industry, then it
may be essential to possess it in order to
compete, but it will not be a sufficient basis
for competitive advantage.
• In oil and gas exploration, new technologies
such as directional drilling and 3-D seismic
analysis are critical to reducing the costs of
finding new reserves. As a result, such
technologies are “needed to play,” but they
are not sufficient to win.
• A resource or capability must be
relevant to the key success
factors in the market.
• As retail banking shifts toward
ATM and online transactions, so
the retail branch networks of
the banks have become less
relevant for customer service.
Sustaining Competitive
Advantage

• Durability • The joint venture between the two

• Some resources are more durable than others and, hence, are a more secure basis companies gave GM a birds-eye view of
for competitive advantage. Toyota’s system. Yet, after two decades of
• The increasing pace of technological change is shortening the useful life span of benchmarking, capital investment and
most resources including capital equipment and proprietary technologies. employee training, GM was still lagging in
• Brands, on the other hand, can show remarkable resilience to time. efficiency, quality, and flexibility.
• Heinz sauces, Kellogg’s cereals, Guinness stout, Burberry raincoats and Coca-Cola
have been market leaders for over a century. • Asset mass efficiencies occur where a strong
initial position in technology, distribution
• Replicability Music of the band “The Police” channels, or reputation facilitates the
subsequent accumulation of these resources.
• The Band – P0LICE or The Talking Heads
• If a firm cannot buy a resource or capability, it must build it. • ● Time compression diseconomies are the
additional costs incurred by
• In financial services, most innovations in new derivative products can be imitated
easily by competitors. imitators when attempting to accumulate rapidly
• Capabilities based on complex organizational routines are less easily replicable. a resource or capability.
• Federal Express’s national, next-day delivery service. Some capabilities appear • Thus, “crash programs” of R&D and “blitz”
simple but prove difficult to replicate. advertising campaigns tend to be less
• Throughout the 1980s and 1990s, General Motors struggled to understand and productive than similar expenditures made
replicate the Toyota lean production system. over a longer period.
Sustaining Competitive
Advantage Cont’d - Transferability

• ●Imperfect information regarding the quality and productivity of resources creates risks for buyers.
• Sellers of resources have better information about the characteristics of the resources on offer than
potential buyers—this creates a “lemons problem” for firms seeking to acquire resources.

• ● Complementarity between resources means that the detachment of a resource from its “home
team” causes it to lose productivity and value.
The sale of Jaguar Cars, first to Ford and then to Tata Motors of India has almost certainly eroded its
brand value.

● Organizational capabilities, because they are based on teams of resources, are less mobile than
individual resources. Even if the whole team can be transferred …dependence of the team on a wider
network of relationships and corporate culture
When Your Competitive Advantage
Walks Out the Door: Gucci

• On September 10, 2001, French retailer Pinault Printemps Redoute (PPR) agreed to acquire Gucci Group—the Italian-
based fashion house and luxury goods maker. On November 4, 2003, the managers and shareholders of the two
companies were stunned to learn that Chairman Domenico De Sole and Vice Chairman Tom Ford would be leaving
Gucci in April, 2004.
• The duo had masterminded Gucci’s transformation from a near-bankrupt family firm with an over-extended brand into
one of the world’s hottest fashion houses. As creative director, Tom Ford established Gucci as a style leader and hired
young designers such as Stella McCartney and Alexander McQueen
•
• .De Sole’s astute leadership had instituted careful planning and financial discipline and built Gucci’s global presence—
especially in Asia. How great a blow was De Sole and Ford’s departure to the parent PPR? In principle, a new
• CEO and new head of design could be hired. In practice, talent of the ilk of De Sole and Ford was rare—especially a
combination of designer and CEO who could collaborate around a shared vision.
• The stock market’s reaction was ominous. On November 3, 2003, Gucci’s share price was $86.10; on November 6 it had
fallen to $84.60. However, in the absence of PPR’s guarantee to acquire Gucci’s shares at $85.52, analysts estimated
that Gucci would be trading at around $74.
• The implication was that Gucci was worth $1.2 billion less without De Sole and Ford than with them.
• Source: Adapted from articles in the Financial Times during November 5–8, 2003.
Putting Resource and Capability Analysis
to Work: A Practical Guide

• Step 1 Identify the Key Resources and Capabilities

. Which factors determine why some firms in an industry are more successful than others and on what
resources and capabilities these success factors are based?
1) Volkswagen AG, We can start with key success factors in the world automobile industry: low-cost
production, attractively designed new models embodying the latest technologies, the financial
strength t
What capabilities and resources do these key success factors imply? They would include manufacturing
capabilities, new product development capability, effective supply-chain
2) UACS and FON University:
Employed faculty 23 – 67
WoS papers 2019 6 – 0
Capabilites for research at UACS are much more higher than FON, though resoirces ( number of
professors) are on the FON side
Putting Resource and Capability Analysis
to Work: A Practical Guide Cont’d
• Step 2 Appraising Resources and Capabilities

• Resources and capabilities need to be appraised against two key

• Accessing Importance
• Assessing Relative Strengths Benchmarking
• Bringing Together Importance and Relative Strength
Step 3 Developing
Strategy Implications
• Exploiting Key Strengths
• Having identified resources and
capabilities that are important
and where our company is
strong relative to competitors,
the key task is to formulate our
strategy to ensure that these
resources are deployed to the
greatest effect.
• Managing Key Weaknesses
• What does a company do about its key
weaknesses?
Converting weakness into strength is
likely to be a long-term task for most
companies.
In the short to medium term, a
company is likely to be stuck with the
resources and capabilities it has.
The most decisive—and often most
successful—solution to weaknesses in
key functions is to outsource.
3. Developing Strategy Implications
Managing Key Weaknesses by Outsourcing
3. Developing Strategy Implications,
Managing Key Weaknesses
Through clever strategy formulation, a firm may be able to negate the impact of its key
weaknesses
• Harley Davidson – BUILDS ON THE
NIKE TRADITION!
In athletic shoes and clothing, Nike undertakes • Consider Harley-Davidson: in
competition with Honda, Yamaha, and
product design, marketing, and BMW and with sales of 300, 000 bikes a
overall “systems integration,” but year (compared with 10 million at
Honda), Harley is unable to compete on
manufacturing, technology.
logistics, and • It has made a virtue out of its outmoded
technology and traditional designs.
many other functions Harley-Davidson’s obsolete push-rod
are contracted out.
engines and recycled designs have
become central to the retro-look appeal
of the “hog.”
3. Developing Strategy Implications Cont’d

• FORD
• During the 1930s, Ford was almost completely vertically integrated. At
its massive River Rouge plant, which once employed over 100 000
people, coal and iron ore entered at one end, and completed cars
exited at the other.
• In 2004, Ford opened its Dearborn Truck Plant on the old River Rouge
site. The new plant employed 3 200 Ford workers and an equal
number of suppliers’ employees.
• Almost all component production was outsourced along with a major
part of design, engineering, assembly, IT, and security.
3. Developing Strategy Implications
Managing Superfluous Strengths?
• What about those resources and capabilities where a company has
particular strengths, but these don’t appear to be important sources of
sustainable competitive advantage? One response may be to lower the
level of investment from these resources and capabilities.
• If a retail bank has a strong but increasingly underutilized branch
network, this may be an opportunity to prune its real estate assets and
invest in web-based customer services.
• However, in the same way that companies can turn apparent
weaknesses into competitive strengths, so it is possible to develop
innovative strategies that turn apparently inconsequential strengths
into key strategy differentiators.
3. Developing Strategy Implications
Continued
• Edward Jones’ network of brokerage
offices and 8 000-strong sales force
looked increasingly irrelevant in an
era when brokerage transactions
were going online.
• However, by emphasizing personal
service, trustworthiness, and its
traditional, conservative investment
virtues, Edward Jones has built a
successful contrarian strategy based
on its network of local offices.
• In the fiercely competitive MBA
market, business schools should
also seek to differentiate on the
basis of distinctive resources and
capabilities.
Georgetown’s Jesuit heritage is not an
obvious source of competitive
advantage for its MBA programs. Yet,
the Jesuit approach to education is
about developing the whole person;
this fits well with an emphasis on
developing the values, integrity and