Advantages and Challenges of Developing a Strategy for Competitive Advantage Based on Resources and Capabilities
Examine the advantages and challenges of developing a strategy for competitive advantage based on resources and capabilities. Illustrate your answer with appropriate examples.
In lights of changing technical advancements, cut-throat competitions and unstable global economic conditions, managers need to consider strategies to sustain competitive advantage more frequently then ever. And no matter how organized their companies are and which industries they are working in, they can quickly start by doing an internal analysis of the company and define the strengths or weaknesses in different areas. In that case, these companies are trying to developing a strategy for competitive advantage based on “resources and capabilities”. Prahalad and Hamel (cited in B820, Unit 3, p. 7) are accounted for the popularization of resource-based view (RBV) approach and they described “resources and capabilities” as “Core competencies”. They argued that competitive advantages are based on core competencies developed.
Under the notion of RBV, Barner (cited in B820, Unit 3, p. 14) believes that if organizational resources are rare, imperfectly imitable and non-substitutable, then organization will sustain competitive advantages. RBV is being treated as a tool to handle organization strategic issues. The focus is primarily on analyzing internal strengths and weaknesses; so that the organization can maximize the use of Tangible, Intangible and Human resources described by Grant (cited in B820, Unit 3, p. 24) and perform distinctively different in the industry. For example, Janpanese auto manufacturer, Nissan (cited in B820, Unit 3, p. 24), is well known for its ability to compete in terms of price largely due to its capabilities on welding, painting and assembly technology.
The advantages of developing a strategy for competitive advantage based on RBV:
Based on the assumptions that “1. organizations differ from each other in respect of their resource and capability endowments” and
In lights of changing technical advancements, cut-throat competitions and unstable global economic conditions, managers need to consider strategies to sustain competitive advantage more frequently then ever. And no matter how organized their companies are and which industries they are working in, they can quickly start by doing an internal analysis of the company and define the strengths or weaknesses in different areas. In that case, these companies are trying to developing a strategy for competitive advantage based on “resources and capabilities”. Prahalad and Hamel (cited in B820, Unit 3, p. 7) are accounted for the popularization of resource-based view (RBV) approach and they described “resources and capabilities” as “Core competencies”. They argued that competitive advantages are based on core competencies developed.
Under the notion of RBV, Barner (cited in B820, Unit 3, p. 14) believes that if organizational resources are rare, imperfectly imitable and non-substitutable, then organization will sustain competitive advantages. RBV is being treated as a tool to handle organization strategic issues. The focus is primarily on analyzing internal strengths and weaknesses; so that the organization can maximize the use of Tangible, Intangible and Human resources described by Grant (cited in B820, Unit 3, p. 24) and perform distinctively different in the industry. For example, Janpanese auto manufacturer, Nissan (cited in B820, Unit 3, p. 24), is well known for its ability to compete in terms of price largely due to its capabilities on welding, painting and assembly technology.
The advantages of developing a strategy for competitive advantage based on RBV:
Based on the assumptions that “1. organizations differ from each other in respect of their resource and capability endowments” and
References: The Open University (2006) B820 Strategy, Unit 1, ‘Introduction: What is Strategy? ’, Milton Keynes, The Open University. The Open University (2006) B820 Strategy, Unit 2, ‘Analyzing the external environment’, Milton Keynes, The Open University. The Open University (2006) B820 Strategy, Unit 3, ‘Competing with Capabilities? ’, Milton Keynes, The Open University.