Class 2: Competing on Resources HBR

Question 1

What are the five characteristics of strategically valuable resources? A resource is strategically valuable is it passes these 5 tests.

Answer 1

1. They are hard to copy
2. Depreciate Slowly [Disnaey brand and F.Canine videos]
3. Company, not employees, suppliers, or customers, control the value
4. Can’t be easily substituted
5. Superior to similar resources that competitors own

Question 2

How does “competing on resources” relate to Porter’s “5 Forces”?

Answer 2

They both contribute to the strategy. 5 Forces by Porter are externally focused while Competing on resourses is internally focused

Question 3

In what 3 form can strategically valuable resources take place?

Answer 3

1 . Physical assets

2. Intangible assets (strong brand)
3. Capabilities (mfg process)

Question 4

What are characteristics of Inimitable (hard to copy) recources?

Answer 4

1. Physical Uniqueness (real state or patents)
2. Path dependency (all that has happened to get there, brand loyalty)
3. Causal ambiguity (can’t disentangle what the valuable resource is and how to re-create it -> org capabilities)
4. Economic deterrence (sizeable investment, risky)

Question 5

What is something to watch out when doing the test of SUPERIORITY?

Answer 5

Managers do not assess them their resources relative to competitors. Core competence has often become a a “feel good” exercise that no one fails.

It should be a harsh external assessment of what it does better than competitor

Disaggregation is important not only for identifying truly distinctive resources but also for deriving actionable implications. At the same time, the value comes from the combination of skills and resources.

Question 6

What are resource strategic implications?

Answer 6

Valuable resources must still be well joined together

Value is eroded with time and competition, keep looking and evolving

Corporate office must be on the look out of the crown jewels

Be aware of the external also, 5 forces, not just internal resources

Leverage resources in other markets that these can be competitive but beware that these may lose value when moved away from the original setting.

Question 7

Three common strategic errors when trying to leverage resources in other foci

Answer 7

1. Overestimate transferability. [Path dependence & Causal Ambiguity]
2. Overestimate ability to compete in highly profitable industries. Barriers of entry are real
3. Diversification mistake to assume that generic resources, such as lean manufacturing, will be a major source of competitive advantage in a new market - regardless of the specific competitive dynamics of the market.

Upside could be great, but have sharp eye on dynamic industry context and competitive situation.