Assumes that a firms resources and capabilities are the primary drivers of

Assumes that a firms resources and capabilities are

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Assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance.
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The Resource-Based View Resources and Capabilities Tangible: Factories, products; Intangible: reputation Used to conceive of and implement strategies A subset of resources that enable a firm to take full advantage of other resources Marketing skill, cooperative relationships
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The Resource-Based View Four Categories of Resources Cash, retained earnings Plant and equipment, geographic location Skills and abilities of individuals Reporting structures, relationships
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The Resource-Based View Two critical assumptions of the RBV It may be costly for firms without certain resources to acquire or develop them Some resources may not spread from firm to firm easily
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The Resource-Based View What do these assumptions really mean? The firm possessing the valuable resources will likely gain a sustained competitive advantage
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The Resource-Based View Managers of a firm could take resources that seem homogeneous and ‘bundle’ them to create heterogeneous combinations Competitive advantage typically stems from several resources and capabilities ‘bundled’ together
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Internal Analysis Tool and Framework The VRIO Framework The four important questions
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VRIO Framework If a firm has resources that are: The firm is Organized to exploit these resources then the firm can expect to enjoy a sustained competitive advantage.
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VRIO Framework In theory: Does the resource enable the firm to exploit an external opportunity or neutralize an external threat? The practical: Does the resource result in an increase in revues, a decrease in costs, or some combination of the two?
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VRIO Framework Value continued eg , Porter’s 5 forces How would a firm know what generic types of opportunities are available for it to take advantage of? Determine the generic industry type and explore those opportunities.
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VRIO Framework If a resource is not rare, then perfect competition dynamics are likely to be observed (i.e., no competitive advantage, no above normal profits) A resource must be rare enough that perfect competition has not set in
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VRIO Framework The temporary competitive advantage of valuable and rare resources can be sustained only if competitors face a cost disadvantage in imitating the resource
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VRIO Framework If there are high costs of imitation, then the firm may enjoy a period of sustained competitive advantage A sustained competitive advantage will last only until a duplicate or substitute emerges If a firm has a competitive advantage, others will attempt to imitate it
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VRIO Framework The question of Imitability First mover advantages Path dependence Causal links between resources and competitive advantage may not be understood Bundles of resources fog these causal links The social relationships in resources may be so complex that managers cannot really manage them or replicate them Patents Patents may be two- edged sword Offer a period of protection if the firm is able to defend its patent rights Required disclosure may actually decrease the cost of imitation, and the timing
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  • Fall '08
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