Article Review: Firm Resources and Sustained Competitive Advantage by Jay Barney

Topics: Generic drug, Pharmaceutical industry, Drug development Pages: 2 (660 words) Published: October 21, 2012
When we left off in the last seminar, we were just starting to talk about firm specific advantages. According to Barney and his article Firm Resources and Sustained Competitive Advantage, a few things are needed to gain a firm specific advantage. But also, he argues that a firm can gain a Sustained Competitive Advantage. SLIDE

According to Barney, a firm has a sustained competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors AND when these other firms are unable to dublicate the benefits of this strategy. But what does a company need to gain such an advantage?

First of all, it needs certain resources, which can include assets, capabilities, products, information, knowledge etc. SLIDE
But these resources must have four attributes:
1. they must be valuable in the sense that they exploit opportunities or neutralize threats in a firm’s environment. This goes without saying. 2. They must be rare among a firm’s current and potential competition. This simply means that this resource or strategy cannot be implemented by other firms at the same time. 3 They must be imperfectly imitable (hard to copy for other firms) and 4. There cannot be strategically equivalent substitutes for this resource that are valuable, but neither rare or imperfectly imitable. Can anyone think of a specific firm, or a type of business or industry, which has a clear example of sustained competitive advantage? Short discussion.

We thought about what kind of a firm could gain a sustained competitive advantage, and came to the conclusion that certain pharmaceutical companies are able to gain perfect sustained competitive advantage. To explain why, we need to have a look at the pharmaceutical market. To make things a bit simple, we can divide the industry into two different categories: Companies which develop new kinds of medicine, and others which copy the original medicine, and produce what...
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