1. Resource-Based Competitive Advantage
Chapter 6

2. Learning Objectives
Compare types of resources, relationship to competitive advantage.
Difference between resources and capabilities.
Categories of resources.
How to analyze resources and capabilities.

3. Types of Resources Tangible Intangible Ordinary Extraordinary
Hard assets; on balance sheet
Intangible
Soft assets; not usually on balance sheet
Ordinary
Necessary to compete; not sufficient for advantage
Extraordinary
Basis for sustainable competitive advantage

5. Categories of Resources
Knowledge
Organizational
Social
Technology
Human
Physical
Financial

6. Dimensions of Extraordinary Resource
Valuable It is Valuable
Rare It is Rare
Imitation It is difficult to Imitate
Substitution It cannot be Substituted for
Tradable It cannot be Traded for
VRIST

7. Sustainable Competitive Advantage

8. Sources of Durable Advantage
Historical conditions
Often based on original opportunity recognition
e.g. locking up tangible resources
Causal ambiguity
Causes of advantage poorly understood
Often based on tacit components
Social complexity
Many "moving parts" that interact
Impossible to tell what each part does

9. Capabilities are Built from Extraordinary Resources
"Sets of tightly integrated activities, skills, routines that rely on coordinated resources, creating value in a superior fashion."
Note connections with Value Chain.

10. Capabilities and Resources

11. P&G's "Connect & Develop" Improve new product development capability
Embed researchers in emerging nation communities to observe use & practices
Create more vital contacts upstream with suppliers and scientists
Results
Enhanced opportunity recognition and value creation capabilities

12. P&G's "Connect & Develop" V R I S T 70 technology 50,000 R&D workers
Raw
Materials
Suppliers D
istribution
Customer s
50,000 R&D workers
in 300 suppliers
70 technology
entrepreneurs
Connections are valuable, rare, inimitable, non-substitutable, non-tradable
V R I S T

13. Conducting a Resource Analysis
Develop list of resources and capabilities
Tough to identify intangibles at the core
Probe deeper: "What is the cause of this outcome?"
Use VRIST framework to assess truly extraordinary resources & capabilities
Develop plans to leverage extraordinary resources & capabilities
Evaluate the relevance of extraordinary resources to industry Key Success Factors