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The Resource-based view of Competitive Advantage

The Resource-based view of Competitive Advantage. Paul C. Godfrey Mark H. Hansen Marriott School of Management Brigham Young University. What are resources?. The building blocks of valuable activities. Assets, attributes, capabilities, and skills. A Balance Sheet Asset

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The Resource-based view of Competitive Advantage

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  1. The Resource-based view of Competitive Advantage Paul C. Godfrey Mark H. Hansen Marriott School of Management Brigham Young University

  2. What are resources? • The building blocks of valuable activities • Assets, attributes, capabilities, and skills • A Balance Sheet Asset • Supports/ facilitates differentiation • Skill in broadening and preserving • $23.7 BB Brand Equity (2008) • A Balance Sheet Asset • Supports/ facilitates differentiation • Disney’s capability has broadened reach, deepened value • $7.5 BB Brand Equity (2007) Disney from Millward Brown Optimor Brandz 2008 Survey ESPN equity from Forbes “The worlds top sports brands, Sep 07

  3. What makes a resource? • Value • Influences a firm’s demand curve (differentiation--Apple) • Alters a firm’s supply (cost) curve (Wal*Mart) • Rare • Few competitors have it (McDonalds locations) • Difficult to imitate • Isolates supply advantages • Competitors can’t copy (Coke’s int’l distribution) • Difficult to substitute for • Preserves demand • Customers can’t find equal value (United Airlines) • Appropriability • Resource and profit ownership (NFL teams and players)

  4. Barriers to imitation • Historical advantages (Coke) • Path dependent development (Boeing) • Complex systems (Pharmaceuticals) • Tacit knowledge (Apple) • Property rights (Oil Exploration)

  5. Barriers to substitution • Unique product technical attributes (Oracle databases) • Positive externalities (Microsoft Office) • Creating a unique experience (Major League Sports) • Best when built on inimitable inputs (Disneyland)

  6. Finding resources in the value chain Firm Infrastructure Human Resource Management Technology Development Procurement Culture of decentralization, trust (Nordstroms) Increased productivity, loyalty, low turnover (Costco) Support (Enabling) Activities Clearly understand costs/markets (Amazon.com) M a Reduce costs—JIT, improve quality, innovation (Toyota) r g i Quality systems (GE) Distribution (Wal*Mart) n Brand equity (Apple) Customer Service (American Express) Inbound Logistics Operations Outbound Logistics Marketing & Sales After-Sales Service Primary (Core) Activities Source: Michael Porter, Competitive Advantage, 1985

  7. The resource-base of Me, Inc. • Knowledge, skill, and personal capabilities are your greatest assets • They are portable • They can be enhanced by personal effort • Knowledge and skill are highly depreciable • The cutting edge of knowledge is about 6 months • You need to be a lifelong learner

  8. Lifelong learning • Learning comes in many forms • Cognitive—reading, courses • Experience—activities, projects • Revelation—study, prayer, meditation • Read for business and for pleasure • Employer sponsored education is a must • Personal reflection and PAR’s—what have I learned lately

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