Strategic Management and Policy – Chapter 3

what are the 2 key assumptions of the RBV?
1) resource heterogeneity
2) resource immobility
resource heterogeneity-
different firms may possess different resources and capabilities, even if in the same industry
resource immobility-
a specific firm may possess a resource or condition that is very costly for other firms to possess or copy
what do the key assumptions of RBV really mean?
firms are different and those differences may last awhile due to immobility
managers should create which key assumption of the RBV?
BOTH resource heterogeneity and immobility
resources-
tangible and intangible assets of a firm that are used to conceive and implement strategies
what are the 4 categories of resources?
1) financial (cash, RE)
2) physical (PPE, trademarks, goodwill)
3) human (skills, abilities, employee benefits)
4) organizational (culture, relationships)
capabilities-
subset of firm’s resources that allow a company to take full advantage of the other resources it controls.
list two examples of companies with specific capabilities
1) Coca-cola and marketing
2) Apple and research and development
strengths-
any resource that creates value
Factors that influence the costs of resources / capability imitation: (4)
1) unique historical conditions
2) causal ambiguity
3) social complexity
4) patents
unique historical conditions-
1) definition
2) how affect cost of imitation
1) when a firm gains low cost access to resources due to its place in time and space
2) increases cost of imitation
causal ambiguity-
1) definition
2) how affect cost of imitation
1) when a firm is unable to determine what it is that gives another firm a competitive advantage
2) costly to try and imitate
social complexity-
1) definition
2) how affect cost of imitation
1) when the resources a firm uses to gain a competitive advantage involves interpersonal relationships, trust, culture, etc
2) more costly
patents-
1) definition
2) how affect cost of imitation
1) double edged sword bc free time to produce but shows competitors how products made. Only applicable in high end countries that acknowledge US patent laws
2) low cost to imitate but have free reign for 7-10yrs
a firm has a resource that is not valuable. what is the competitive and economic implications?
competitive implications- competitive disadvantage
economic implications- below normal economic level
a firm has a valuable resource, but the resource is not rare. what is the competitive and economic implications?
competitive implications- competitive parity
economic implications- normal
a firm has a valuable resource that is also rare. however the resource is not costly to imitate. what is the competitive and economic implications?
competitive implications- temporary advantage
economic implications- above normal
a firm has a resource that is valuable, rare, and costly to imitate. what is the competitive and economic implications?
competitive implication- sustained advantage
economic implication- above normal
VRIO stands for what
Valuable
Rarity
Imitation
Organization
a firm’s resource is valuable if: (2)
1)reduces cost / enhances revenue
2) helps exploit opponent or mitigate threat
a firm’s resource is rare if:
many competitors do not possess the same resource
a firm’s resource, in regards to Imitation:
1) sources
2) cheap or costly?
1) unique historical conditions, causal ambiguity, social complexity, patents (depending on country)
2) costly to imitate
a firm’s resource, in regards to organization:
1) examples
1) structure, controls, and compensation
what question should you ask when questioning the value of a resource / capability?
does this resource / capability enable a firm to exploit an external opportunity or neutralize a threat?
what question should you ask when questioning the rarity of a resource / capability?
how many competing firms already possess this resource / capability?
what question should you ask when questioning the imitability of a resource / capability?
do firms without this resource / capability face a cost disadvantage in obtaining /developing resource compared to firms that already possess it?
what question should you ask when questioning the organization of a resource / capability?
is a firm organized to exploit the full competitive potential of said resource / capability?