1. MJF7 Strategy concepts overview (2): Resource based view of the firm

2. 1. Limitation of the I/O based strategy theory Monopoly rent vs. efficiency rent Strategic group concept

3. 2. Firm specific resources The source of sustainable competitive advantage lies in the unique firm resources, but not in the external environment.

4. 3. Historical view of theories of distinctive competence General managers (Harvard school) –Decision makes and administrator Institutional leaders (Selznick) –Visionary and structure builder Ricardian economics –The economic consequences of owning land.

5. 4. Endogenous environment analysis: VRIIO framework Tangible and intangible resources Capability = a combination of resources Value chain: a means to identify capabilities

6. 4-1. Resource analysis criteria:VRIIO Criteria to evaluate firm resources V aluable R are I nimitable I mperfectly substitutable O rganizational arrangement to execute strategies

7. 4-2. The question of “Value” “Do a firm’s resources and capabilities enable the firm to respond to environmental threats and opportunities?” Neutralizing threats and exploiting opportunities. Increasing revenues or decreasing costs. Firm resources that make it difficult for a firm to do the above are weaknesses of the firm. The value of the same set of resources change.

8. 4-3. “Rareness” “How many competing firms already possess particular valuable resources and capabilities?” Valuable, but common resources will be sources of only competitive parity.

9. 4-4. “Inimitability” “Do firms without a resource or capability face a cost disadvantage in duplicating it compared to firms that already posses it?” Duplication cost

10. 4-4. “Inimitability” (continued) Unique historical conditions –time compression diseconomies –first mover’s advantage –path dependence Causal ambiguity Social complexity Patents

11. 4-5. “Imperfect substitutability” “ Do firms without a resource or capability face a cost disadvantage in creating a substitute compared to the firm that already possess it?” Different resources with the same effect