RBV Flashcards
Strategic fit
An external analysis of your industry and what your rivals doing - tells you about what your opportunities and threats are
But it doesn’t provide a focus on what needs to change inside your firm in order to pursue a strategy that increases competitive advantage
Competitive advantage is created through:
- better linking the org to consumers and/or suppliers (external)
- more effectively interesting the organisations primary value adding activities (internal)
- product characteristic
- Environmental analysis alone is insufficient to explain sustainable competitive advantage of firms like google
- Need to look inside firm
Google example
Founded in 1999
The ‘big’ industry players were:
- software - Microsoft
-hardware - HP; Compaq, Dell
-online industry - AOL, eBay, yahoo!
Would have been reasonable to think that it’s approach would be imitated and surpassed (given power of competitors)
Yet despite attempts like MS bing, Google remains the lending search size: $9.6 billioj profits 2015/16
-‘Hamel says they’ve got a darwinianen example so core competencies keep evolving’ Eg their search engine gained ads and then gained personalised ads and so on
Resource categories
Firms resources are all the assets, capabilities, competencies, organisational processes, firm attributes, information, knowledge etc. that it controls. Can be divided into groups -financial capital -physical capital -human capital -organisational capital
Barney VRIO
Valuable; Rare; costly to imitate the firm; organised to capture value from resource.
What they need to create CA.
Value
Resources are valuable if they help organisations to increase perceived customer value - either by increasing product differentiation and/or by decreasing product price of the product
Important to continually review value of resources because constantly charging internal/external conditions can make them less valuable or useless
Rarity
A resource is rare is it can only be acquired by one or very few companies
If it is also unique - CA
When more than few companies have the same resource or use a capability in a similar way, this leads to competitive parity.
Problem: even with competitive parity, a firm should not neglect the resources that are valuable but common.
Imitate
Even if you have tech or knowledge - there are other ways people can find way to imitate it. Substituting - Sony created better colour resolution using something that wasn’t patented
Patents? Rival firm can work around technologies with other things
Barneys 3 reasons why resources hard to imitate
Historical conditions and path dependency - were developed due to historical events or over a long period usually are costly to imitate
Casual ambiguity - companies can’t identify the particular resources that are the cause of CA
Social complexity - the resources and capabilities that are based on company’s culture or interpersonal relationships
Organised to capture value
organise its management systems, processes, policies, organisational structure and culture to be able to fully realise the potential of its valuable, rare and costly to imitate resources and capabilities
Often referred to as ‘complementary’ resources and capabilities - limited ability to generate CA in isolation, but combined with other resources and capabilities enable the firm to realise its potential
Dr Pepper example
Dr Pepper wanted to create a strategic alliance with Pepsi
Rivals agreed would cause monopoly - so couldn’t do it
Dr Pepper doesn’t have global distribution aspect - so not unique and valuable
So then acquired Schweppes - so they had global distribution - so could compete with Pepsi and Coca Cola
Core competencies
Unique to org. Could allow them to operate in multiple markets.
Abilities which resources are deployed through an org activities and processes such as to achieve CA in ways that others can not imitate or obtain.
You can miss the strength of competitions by looking only at their end products, in the same way you can miss the strength of a treat if you only look of its leaves - prahalad and hamel
3 aspects of prahalad and hamel definition
- bundle of skills and tech to provide benefit (under pinned by knowledge set as well as robots, machinery and tech)
- Collective learning org which integrates multiple streams of tech (collective process like google, entrepreneurial people having communication and relationship)
- Depends on communication, involvement and Deep commitment (departments need to meet and collaborate)
Three tests of Core Competence (crucial- like barneys VRIO)
1 makes a significant contribution to customer perceived value (or significant process and manufacturing cost advantage)
2 provides access to a wide variety of existing and new markets - new products as well
3 is difficult for competitors to imitate (complex harmonisation of production technologies and skills)
Honda
Core competencies at Honda
Economies of scope in engine knowledge
-batteyD diesel, electric and petrol engine knowledge
- these makes changes to numerous different markets - their engines seen as superior in reliability and gain legitimacy from this to into other markets than just cars
