Business Policy Chapter 3
Terms in this set (25)
Resources in the RBV (resource-based view)
the tangible and intangible assets that a firm controls that it can use to conceive and implement its strategies
subset of a firm's resources and are defined as the tangible and intangible assets that enable a firm to take full advantage of the other resources it controls
Include all the money, from whatever source, that firms use to conceive and implement strategies.
profits that a firm made earlier in its history and invests in itself, are also an important type of financial resource
include all the physical technology used in a firm
include the training, experience, judgment, intelligence, relationships, and insight of individual managers and workers in a firm
An attribute of groups of individuals.
implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms
some of these resource and capability differences among firms may be long lasting, because it may be very costly for firms without certain resources and capabilities to develop or acquire them
four questions that must be asked about a resource or capability to determine its competitive potential: the questions of value, rarity, imitability, and organization
The question of value
Does a resource enable a firm to exploit an environmental opportunity and/or neutralize an environmental threat?
Does the resource result in an increase in revenues, a decrease in costs, or some combination of the two?
The question of rarity
Is a resource currently controlled by only a small number of competing firms?
There may be other firms that possess the resource, but still few enough that there is rarity.
The question of Imitability
Do firms without a resource face a cost disadvantage in obtaining or developing it?
Intangible resources are usually more costly to imitate than tangible resources. A sustained competitive advantage will last only until a duplicate or substitute emerges.
The question of Organization
Are a firm's other policies and procedures organized to support the exploitation of its valuable, rare, and costly-to-imitate resources?
A firm's structure and control mechanisms must be aligned so as to give people ability and incentive to exploit the firm's resources.
Four categories of resources
- Financial (cash, retained earnings)
- Physical (plant & equipment, geographic location)
- Human (skills & abilities of individuals)
- Organizational (reporting structures, relationships)
Generic Value Chain
Technology Development > Product Design > Manufacturing > Marketing > Distribution > Service
imperfectly imitable resource
valuable and rare organizational resources, however, can be sources of sustained competitive advantage only if firms that do not possess them face a cost disadvantage in obtaining or developing them, compared to firms that already possess them
"no action" response
A firm may decide to take no action because:
• The other firm is serving a different market
• A response may hurt its own competitive advantage
• It does not have the resources and capabilities to mount an effective response
• It wants to reduce or manage rivalry in the market through tacit collusion
Sources of Costly Imitation
unique historical conditions, causal ambiguity, social complexity, patents
decisions made by other firms given the strategic choices of a particular firm
Any actions a firm takes that have the effect of reducing the level of rivalry in an industry and that also do not require firms in an industry to directly communicate or negotiate with each other
when tacit cooperation has the effect of reducing supply and increasing prices
Attributes of industry structure that facilitate the development of tacit cooperation
1. Small number of competing firms
2. Homogeneous products and costs
3. Market-share leader
4. High barriers to entry
specific actions a firm takes to implement its strategies