Lecture 3

Resource-based view (RBV) of strategy states that [blank_start]competitive advantage[blank_end] & [blank_start]superior performance[blank_end] of an organisation are explained by [blank_start]distinctiveness[blank_end] of its [blank_start]capabilities[blank_end]. It is sometimes also called ‘[blank_start]capabilities view[blank_end]’.

Resource-based view focuses on how [blank_start]individual firms[blank_end] differ from [blank_start]each other[blank_end] within an industry & can [blank_start]outperform[blank_end] industry average [blank_start]consistently[blank_end] & [blank_start]significantly[blank_end]

Resources & capabilities of an organisation contribute to its [blank_start]long-term survival[blank_end] & potentially to [blank_start]competitive advantage[blank_end]

Resources- [blank_start]Assets[blank_end] that organisations [blank_start]have[blank_end] or can [blank_start]call upon[blank_end], which is ‘[blank_start]what we have[blank_end]’

Capabilities- Refers to what an [blank_start]individual[blank_end] or [blank_start]organization[blank_end] is able to do at starting level of [blank_start]performance[blank_end], based on potential [blank_start]resources[blank_end] accumulated

Competences- Ways those [blank_start]assets (resources)[blank_end] are used [blank_start]effectively[blank_end], which is ‘[blank_start]what we do well[blank_end]’

Resource-based view argues [blank_start]external[blank_end] environment is subject to [blank_start]rapid change[blank_end], [blank_start]internal[blank_end] capabilities offer more [blank_start]secure[blank_end] basis for [blank_start]competitive advantage[blank_end] & [blank_start]firm-specific[blank_end] capabilities are primary source of [blank_start]profitability[blank_end]

Dynamic capabilities- Refers to [blank_start]ways[blank_end] by which an [blank_start]organisation[blank_end] has ability to [blank_start]renew[blank_end] & [blank_start]recreate[blank_end] its strategic capabilities to meet [blank_start]needs[blank_end] of [blank_start]changing environments[blank_end]

One generic dynamic capabilities is [blank_start]sensing capabilities[blank_end]. This involves constantly [blank_start]scanning[blank_end] & [blank_start]exploring[blank_end] new opportunities across [blank_start]markets[blank_end] & [blank_start]technologies[blank_end]

Another generic dynamic capabilities is [blank_start]seizing capabilities[blank_end]. This involves addressing [blank_start]opportunities[blank_end] through new [blank_start]products[blank_end], [blank_start]processes[blank_end] & [blank_start]activities[blank_end]

Third generic dynamic capabilities is [blank_start]re-configuring capabilities[blank_end]. New products & processes may require [blank_start]renewal[blank_end] & [blank_start]re-configuration[blank_end] of capabilities & [blank_start]investment[blank_end] in new technologies in future

Threshold capabilities- Those needed for an organisation to meet [blank_start]necessary[blank_end] requirements to [blank_start]compete[blank_end] in given [blank_start]market[blank_end] & achieve equivalence with [blank_start]competitors[blank_end] in that [blank_start]market[blank_end] – 'qualifiers'

Distinctive capabilities- Those that are required to achieve [blank_start]competitive advantage[blank_end]. Distinctive or unique capabilities that are of [blank_start]value[blank_end] to customers & which [blank_start]competitors[blank_end] find difficult to [blank_start]imitate[blank_end] – 'winners'

Core competences are linked set of [blank_start]skills[blank_end], [blank_start]activities[blank_end] & [blank_start]resources[blank_end] that, together deliver [blank_start]customer value[blank_end], [blank_start]differentiate[blank_end] business from its [blank_start]competitors[blank_end] & potentially, can be extended & [blank_start]developed[blank_end] as markets change or new opportunities [blank_start]arise[blank_end]

VRIO- Four key criteria by which [blank_start]capabilities[blank_end] can be assessed in terms of providing [blank_start]basis[blank_end] for achieving [blank_start]sustainable competitive advantage[blank_end]

V of VRIO is [blank_start]value[blank_end]. This involves taking advantage of [blank_start]opportunities[blank_end] & neutralising [blank_start]threats[blank_end], providing [blank_start]value[blank_end] to customers & products being provided at [blank_start]cost[blank_end] that still allows an organisation to make an acceptable [blank_start]return[blank_end]

R of VRIO is [blank_start]rarity[blank_end]. This refers to [blank_start]rare capabilities[blank_end] that are possessed uniquely by [blank_start]one[blank_end] organisation or only by [blank_start]few[blank_end] others. Also, [blank_start]rarity[blank_end] could be temporary

I of VRIO is [blank_start]inimitability[blank_end]. [blank_start]Sustainable[blank_end] advantage is more often found in [blank_start]competences[blank_end] (way resources are [blank_start]managed[blank_end], [blank_start]developed[blank_end] & [blank_start]used[blank_end]) & way competences are [blank_start]linked[blank_end] together & integrated. This can determine whether [blank_start]competitors[blank_end] can imitate or not. Also, it involves casual [blank_start]ambiguity[blank_end], [blank_start]complexity[blank_end], [blank_start]culture[blank_end] & [blank_start]history[blank_end]

O of VRIO is [blank_start]organisational support[blank_end]. This involves organisation being suitably [blank_start]organised[blank_end] to support [blank_start]valuable[blank_end], [blank_start]rare[blank_end] & [blank_start]inimitable[blank_end] capabilities that it has. This includes appropriate [blank_start]processes[blank_end] & [blank_start]systems[blank_end]

VRIO analysis helps to [blank_start]evaluate[blank_end] if, how & to what extent an organisation or company has [blank_start]resources[blank_end] & [blank_start]capabilities[blank_end] that are [blank_start]valuable[blank_end], [blank_start]rare[blank_end], [blank_start]inimitable[blank_end] & supported by [blank_start]organisation[blank_end]

Two critiques of the resource-based view is it may be [blank_start]tautological[blank_end] (using words or phrases that express same meaning) & [blank_start]non-falsifiable[blank_end]

To understand competitive advantage of business, business needs to use [blank_start]value chain[blank_end]. [blank_start]Value chain[blank_end] describes categories of [blank_start]activities[blank_end] within an organisation which, together, create [blank_start]product[blank_end] or [blank_start]service[blank_end]. [blank_start]Value chain[blank_end] consists of five primary [blank_start]activities[blank_end] (directly concerned with creation or delivery of [blank_start]product[blank_end] or [blank_start]service[blank_end]) & four support [blank_start]activities[blank_end] (which help to improve [blank_start]effectiveness[blank_end] or [blank_start]efficiency[blank_end] of primary activities)