If the resource is valuable and rare and not expensive to imitate it, then the firm has a temporary competitive advantage. While many resources are valuable in every industry, there are resources which are a strength for one industry while at the same time, a weakness for another. Johnson, Scholes, and Whittington (2008) stated, “The resourced-based view of strategy: the competitive advantage and superior performance of an organization is explained by the distinctiveness of its capabilities”. 0000081511 00000 n

The site may also contain links to affiliate websites, and we receive an affiliate commission for any purchases made by you on the affiliate website using such links. & Strickland, A. Organizing the firm to exploit the resources and capabilities is the last step in the VRIO framework. What constitutes “competitive advantage”? He stated very effectively the cohesion of primary and support activities of an organization emphasizing that the scope of every organization is to survive in the long-term horizon. In addition to the primary activities described by Porter (1985), procurement, technology development, human resource management, and firm’s infrastructure can lead to the gaining of competitive advantage. Exploring Corporate Strategy – Text & Cases, 8th Edition, Prentice Hall, pp.


Without blood nothing can be organized and executed for the benefit of organization. Who reports to who is denoted by formal reporting.

According to Barney (1986b), competitive advantage can be attained if the current strategy is value-creating.

0000059654 00000 n The effective assessment will lead to the adoption of effective strategic plan. The advantage of a VRIO analysis is its simplicity and clarity. The three reasons why resources and capabilities are hard to imitate are. Causal ambiguity: Firms that imitate the resources and capabilities can’t identify or tell the elements that lead to the cause of competitive advantage. Stock increases, bonuses as well as salary increase are some monetary incentives while extra holidays or bigger offices are some non-monetary incentives. The threat of suppliers, the threat of substitutes, the threat of buyers, the threat of rivalry and the threat of entry are some threats which the above resources can alleviate. The choices a firm make with respect to the value chain makes it an important tool in identifying the resources and capabilities.

0000054677 00000 n Come on! If the resource is not valuable, then it should be outsourced as it is of no use to the firm.

Wernefelt (1984) stated that the Resource-Based View (RBV) of a firm is a business management tool used to determine the strategic resources available to a company. By understanding that investing in innovations would increase its leadership position, J&J has been spending heavily on research and development (R&D) for many years.

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