Lecture 5 - Resource Based View And Core Competencies Flashcards
What are the definition and types (physical, human, organizational) of resources (Barney 1991; S)?
Resources: all assets, capabilities, processes, attributes, information, knowledge controlled by the firm, they enable creation & implementation of a strategy
§ Physical: plants, locations, raw material access
§ Human: training, experience, intelligence
§ Organisational: reporting structures, planning, controlling, coordinating
What is the difference between a ompetitive advantage vs. sustained competitive advantage (Barney 1991; S)?
Competitive advantage: a strategy not implemented by a current / potential rival
Sustained competitive advantage: a strategy that can not be implemented and the benefits of which can not be duplicated
What are the VRIN characteristics of resources (Barney 1991; S)?
Valuable: in decreasing threats and taking on opportunities
o Rare: can’t be possessed by many firms e.g. this bundle of physical, human and organisational capital
o Imperfectly imitable: can’t be acquired by a competitor
o Substitutability: there can not be another resource which can achieve the same competitive advantage
What is the link between VRIN resources and sustained competitive advantage (S)?
If VRIN are YYNY it creates a temporary advantage, if YYYY it creates a sustainable competitive advantage with above-average returns
What are dynamic capabilities (Teece et al. 1997; S)?
Capabilities: a demonstrated & potential ability of an organisation to perform against circumstances or competition, key role of strategic management in adopting, integration & reconfiguring organisational skills, resources & functional competences to match requirements of changing environment
o Dynamic: continual redeployment of resources that reflects the changing conditions in the market, it depends on speed & intensity of profit from that market
o Dynamic capabilities: firm’s ability to integrate, build & reconfigure internal and external competences to address rapidly changing environments, “the capacity of an organization to purposefully create, extend, or modify its resource base” (Helfat et al., 2007), reflects firm’s ability to achieve new & innovative forms of competitive advantage given path dependencies and market positions
§ Processes: how things are done: routines, patterns of learning
§ Positions: current specific endowments
§ Paths: strategic alternatives
What are the difficulties of being a “dynamic” firm (Teece et al. 1997; S)?
Not tradeable assets & competencies: need to be built by the company itself
o Path dependencies: firms may be stuck with what they have based on their past decisions
What is a path dependency (Teece et al. 1997; slides for class 9)?
Path dependency: once a decision has been implemented, the chance of implementing alternatives in the future diminishes, institutions are self-reinforcing and the past conditions the future; the continued use of a practice based on historical preference or use even if newer alternatives are available, often easier to follow the path already on
What is the difference between Replication vs. imitation* (Teece et al. 1997; S)?
Replication: redeployment of resources from one setting to another, difficult due to tacidity of knowledge, location / non-location bound resources & trial and error learning
§ Replications bring strategic value: ability to support expansions & can confer value since understanding is the key to improvement
o Imitation: replication by a competitor, more difficult than replication due to causal ambiguity (the ambiguity about the relationship between firm resources & competitive advantage, keeps competitors from understanding this relationship), property rights, appropriateness (this strategy may fit for another company but not for the imitator)
§ Appropriability regimes: describe the ease of imitation, is a function of ease of replication & efficiency of IP rights
What are core competencies? (Prahalad and Hamel)
Core competency: a skill / knowledge which leads to a competitive advantage, is hard to imitate, can be transferred across markets and provides significant benefits
§ How to build: smart R&D, alliances, identification of next-generation competences, patience
§ Importance for strategy due to: need to survive, move upmarket,
§ Importance for firm: helps maintain consistency, explains company change, organises company resources
What are core competencies, core products and end products (Prahalad & Hamel 1990; S)?
Definition:
o Core competencies: the collective learning how to coordinate production skills & integrate technologies, they grow when applied and shared, class of a product functionality, an attribute, a method
o Core products: embodiment of the core competency, companies aim to maximise their world manufacturing share in core products, leads to economies of scale & scope
o End products: the extension of the core product, used to build brand umbrellas
What is the difference between a) VRIN resources (Barney), b) dynamic capabilities (Teece) and c) core competencies (Prahalad & Hamel) (S)?
o VRIN
§ Focuses on the attributes of the crucial resources which help achieve competitive advantage
o Dynamic capabilities
§ Focuses on the dynamic aspect of adaptation to changes in circumstances as being crucial to sustaining a competitive advantage
o Core competencies
§ Competitive advantage stems from the core skill / competency, States that core competencies should be applied to core product where we then maximise our share of the market to leverage our strengths
