Resource-Based View
Resource-Based View
IO vs. RBV
Business Level Strategy
How do we compete in a specific business arena?
Four objectives of business-level strategy
Generate sustainable competitive advantages
Develop and nurture (potentially) valuable capabilities
Respond to environmental changes
Approval of functional level strategies
Business-Level Strategy
The primary objective of business-level strategy is to create “sources of sustainable competitive advantage”.
What is sustainable competitive advantage?
There are many definitions, used by different people in different ways.
What follows is a practical description. But first, we need to back up a bit…
Sustainable Competitive Advantage
An asset is anything the firm owns or controls.
Loosely, “Asset” is to Accounting as “Resource” is to Management.
Types of assets:
Physical: plant equipment, location, access to raw materials
Human: training, experience, judgment, decision-making skills, intelligence, relationships, knowledge
Organizational: Culture, formal reporting structures, control systems, coordinating systems, informal relationships
Sustainable Competitive Advantage
A capability is usually considered a “bundle” of assets or resources to perform a business process (which is composed of individual activities)
E.g. The product development process involves conceptualization, product design, pilot testing, new product launch in production, process debugging, etc.
All firms have capabilities. However, a firm will usually focus on certain capabilities consistent with its strategy.
For example, a firm pursuing a differentiation strategy would focus on new product development. A firm focusing on a low cost strategy would focus on improving manufacturing process efficiency.
The firm’s most important capabilities are called competencies.
Competencies vs. Core Competencies vs. Distinctive Competencies
A competency is an internal capability that a company performs better than other
IO vs. RBV
Business Level Strategy
How do we compete in a specific business arena?
Four objectives of business-level strategy
Generate sustainable competitive advantages
Develop and nurture (potentially) valuable capabilities
Respond to environmental changes
Approval of functional level strategies
Business-Level Strategy
The primary objective of business-level strategy is to create “sources of sustainable competitive advantage”.
What is sustainable competitive advantage?
There are many definitions, used by different people in different ways.
What follows is a practical description. But first, we need to back up a bit…
Sustainable Competitive Advantage
An asset is anything the firm owns or controls.
Loosely, “Asset” is to Accounting as “Resource” is to Management.
Types of assets:
Physical: plant equipment, location, access to raw materials
Human: training, experience, judgment, decision-making skills, intelligence, relationships, knowledge
Organizational: Culture, formal reporting structures, control systems, coordinating systems, informal relationships
Sustainable Competitive Advantage
A capability is usually considered a “bundle” of assets or resources to perform a business process (which is composed of individual activities)
E.g. The product development process involves conceptualization, product design, pilot testing, new product launch in production, process debugging, etc.
All firms have capabilities. However, a firm will usually focus on certain capabilities consistent with its strategy.
For example, a firm pursuing a differentiation strategy would focus on new product development. A firm focusing on a low cost strategy would focus on improving manufacturing process efficiency.
The firm’s most important capabilities are called competencies.
Competencies vs. Core Competencies vs. Distinctive Competencies
A competency is an internal capability that a company performs better than other