What is Resource-Based View ?

Today we examined competitive advantage and the way that we determine whether or
not competitive advantage that’s is by using this framework called the resource based view and the p_r_i_ o framework the sink theory refined and forwarded by professor
giovanni of ohio state university and examining whether or not you have
compared to the tension you certainly do want to have a competitive advantage to
be successful you first have to start with identifying
that which you do especially well than your competitors and so you have to find a distinctive
competence which is something valuable that you will do better than
their competitors hopefully there’s something there in
your organization and u_n_ identified backed by them and leverage it for long-term gains if you look at uh… the ipod mister
holter ipod at the bottom of your screen yet versus its early rival the microsoft soon hypothesize actually uh… more
successful in the long run because it gives continuously innovative had a
quick we’ll witches and did not have and continue to morph into new and
different types of model so under the are indeed the innovative this was
certainly a distinctive competence ok and so
that’s what gives you a competitive capability that rivals cannot match i i
thought that a microsoft kinda gave up on this they just couldn’t keep up with uh… innovative use of the change that
apple is undergoing its very important marketplace this distinctive compensate you hopefully that if i becomes the basis
for sustained competitive advantage when we introduce the word sustained here
because what you really want free successful organization is convinced that lasts uh… over top some examples union with hitler district we are anthem
really more recently even this on is noted for having a lower cost structure
and all other automobile manufacturers which is that a
outsource quite a bit of a very fresh and different leanne andy uh…
automobiles that predicts not to say that day himself a lower price than anybody else but they still have a lower cost
structure which uh… union makes them or to the business model more profit
will organization and one with a higher cross
structure and of course starbucks is pretty easy
to see that starbucks indeed coffee shop arena has innovating coffee drinks training price
premiums for exotic coffee drinks and the surrounding on
something that no other competitors and the coffees were market has been able to
uh… committee so these are certainly things that you better than competitors now the resource based view takes a look at who different kinds
resources capabilities resources are probably one of the most
important in the context of the matter at hand and their resources can be intentional
were intentional that’s how we tie column i use them and of course in july the are you know things you can taste such feel
smell such factories products introduced you to re-engineer you can’t duplicate a
factory of course but there’s also the intangible assets at the organization might have
like reputation you can’t really see that’s you can’t duplicate it uh… because you’ve we don’t know how
exactly affirmed got their at with respect to reputation if indeed if you know it’s a
grand reputation uh… and so these resources are used to uh… find an influence strategies kick the buildings which the second part
of this resource based view just simply says disney organizations resources that allowed its sue exploits um… in the resource base anyway that which it has for long-term gain of
the words of the organization uh… marketing wise and and does it
have relationships with buyers sellers et cetera doesn’t have the ability to
forward those rear uh… or valuable tangible or intangible
resources will be some practical examples of the excellent it makes sense the resource base you uses this happened
and will explain exactly what that means or also believes that the beers company
which you probably know is has worlds qualify monopoly and diamonds as
forwardly integrated back really integrated they yeah in uh… mining rights then many diamond
mines in the world mostly africa uh… and slavery but for a viable
company and so much that diamonds are valuable and and that you are at any place you can get them other than
the beers as a source so you have to be or certainly is very
valuable and that has resources like diamond mines on-line rights et cetera
rear diamonds or certainly rare that’s our are part of the acronym
p_r_i_ part is the in that simple costly imitate probably impossible that
monopoly on the diamond business forward backward in the minds can be very very difficult stutz or if
not impossible to imitate them and so then therefore if they have these
three resources and finally if they are all organized take advantage of that which they have
another words to build a business model and create a platform to deliver product
profitably they can expect to enjoy a long-term
competitive intention and long-term uh… superior profits uh… overtime that that’s again
directly what we want to get our organizations so applying this framework according to
the acronym that week we have at hand we start with the uh… chicks are the market will be
right actually think that’s idea pro finance first introduced back in the day and so if you’re molecule for example um… e or your marketing where it takes subject each of these questions and i can answer
yes then you can determine whether or not
you have a competitive advantage and each of vis questions when u apply
it to your resource or your matter at hand your marketing your your your molecule
whatever it might be is it better then your competitors and if the answer is yes then you’re
probably pretty good shape and if it’s not you won’t find a way to
get there so we start by applying this tool we
start with the fee for value and we look at walmart who courses braver successful uh… their low-cost structure as well allows them to charge lower prices and
many but not all cases and i just picked a firm with a reputation which is charged uh… allows a discharge from more much
more than for appeal care blue jeans or t-shirts
up etcetera so the theoretical part of this value i said that’s a resource available if this resource that’s available left the firm exploit pay opportunity or
neutralize the threat and in the case of moammar both is true it’s low cost structure allows its soo you reach price conscious consumers if they want
to and they do but at the same time it also you during
the recession or double-dip recession whichever you want to consider the state of the economy that worker
cannot choose late two thousand and eleven as i speak you know the threat of the economy others more more people into a lower price stores such as walmart so they’ve
continue to be very very well in the case of howitzers reputation allows them to charge more per pair blue ginger her jacket so if it’s
allowing it to charge more per item s increase revenues so it’s also something that helps the
business model in terms of bottom-line profits uh… you know posture you for example
ninety nine dollars for birthdays offerings of jackets a teenagers are url
younger of college students they can get away with that the skinny jeans are exception expensive against some of the
other competitors and direct competitors for which you
could buy blue jeans so we skip to the second part of the
acronym which is that of uh… of rarity and that’s was really the problem that we think
detroit had over the first part of the selenium from two thousand two thousand nine of
two thousand two thousand and ten if you’ll get mid-sized sedans which you know they fear the focus the
idea that the seagram if you think about it there’s really very little to differentiate these are mobiles from
each other that look very similar they have very similar creature comforts g_m_ pontiac case have a picture appear
on this and my thoughts of prior semesters you think about it gm’s pontiac thought about a quite a bit
and they couldn’t find a way to get to rarity or differentiation as you probably know lesson twelve
months ago g_m_ pontiac just hold line completely off the market they no
longer exists which profit has something to do with
the value of or or the issue a of uh… of rarity it’s been so differentiate themselves and didn’t think that it would be proper
local important try to do so so you know the problem is here if your
resources are rare and it really wasn’t for detroit for ten if not twenty years and what we call
perfect competition sets in and then there’s no competitive
advantage in fact what happened is that these brands where these are mobile companies or offering interest refinancing for sixty years
which is a direct hits the organization in terms of approx for eating the time
value of money uh… moreover they’re offering him one
two three thousand dollars cash back for automobiles sold um… that comes off the bottom line to
that’s not a very profitably to run business that’s what happens when perfect
competition sets and uh… and that happens when you don’t
have a private not necessarily rear in comparison to some of the others so you have to be rare enough or
differentiate enough so that perfect competition dozens of them that they
need to have this problem on the other hand there are only a few other firms that have the same product that you have
then you could be successful power eight you
know as i was sold by gatorade for one at least higher rated celeb a you’re successful profit-making brand of
coca cola because it would differentiate itself
someone and it’s only you really want other
major player in that market so there are cases where uh… you can be rear and perfect competition does not set in if you don’t have a lot of composite
scores of power it really because one must cater it applying that what we know so far about day organization having an asset is
valuable and rare the model offerings of chrysler really we’re not valuable over taking a period of time they just didn’t
have that much value map in the eyes of the consumer happens in a competitive
disadvantage of course there was the uh… financial woes and government
bailout of chrysler uh… several years ago when the reasons they had trouble one of many reasons they had trouble is
that there product offerings just like a value in
the eyes of of american even global consumers if you take a look and organization
would not talk about yet but will talk about more in a moment instead of sonic restaurant sonic restaurant as you may know is
saying smaller basque food chain bye-bye
compared to the subway and mcdonald’s to be sure but they offer you know curbside service uh… we have some menu differentiation from uh… will
certainly for mcdonalds so they’re valuable and so much is at
the drive in restaurants but they’re not a rare in the sense that you know they’re the only fast address
run around in fact there your outnumbered probably hundred to one but nevertheless it there because of
something of value inside has and there may be in the menu offerings were
curbside service which some people really value then he couldn’t say that this firm can
expect to be on par uh… competitively they should be able
to make some relatively good money uh… not especially high but they
should be ok you’ll remember art talk about the razor
scooter and a previous module where in the first three years he was valuable
people wanted that it’s rare no one else had it and there’s our competitive edge at
least temporarily we’ll take a step further by now going
into the question of uh… admissibility work uh… talk about this in the
context of with the times which all right ranking in by fairly recent article and business week which ranks
best global brands the brand value assigned to a good time
uh… eighteen billion dollars which is exceptional vacant charge a lot for
their wares highly differentiated very hard to imitate in fact very very hard to imitate
because of his reputation again it’s intensely can really see that you get a
handle on it you understand that completely how they got it and unit probably prefer appended to go
after building a brand of glove similar values
as a number of organizations that sell uh… you know various purses maybe
three target or department stores for twenty dollars apiece uh… and they have no sites whatsoever
on selling in the supper and market and and eat supper and uh… one of the product offering to
half of of two thousand eleven our persons of the name of this forty
five dollars which i expert expensive for a purpose uh… in addition the intense moments of
the resources are more costly manatee is it’s hard to see it’s hard to is
partially to imitate um… that’s for sure deloitte you know the brand name that accounting
areas very very would be very very close and imitate and harley davidson is the same way they
can charge more for motorcycle or even t-shirt but never motorcycle manufacturer just
because you know you can’t really c pat was
reputation this trip so looking oldham or it’s going to build the indians are
really sooner friends uh… one more time is that if there are high costs of
imitation like for example in the indication of patents for molecule and in fact a patent is not
it can’t be mitigated for for about seventeen to twenty years that you can and julie aid sustained competitive
interest repeated time like this you’ve heard are racist theater however uh… the competitive edge only exists standstill somebody comes up with substitute amazon
dot com of latest offering similar model so this cold racist router for for thirty dollars wal-mart probably even less than that that you can bet that for most
competitive and checked that can be imitated that others will jump into the
market try to imitate it take market share and make money themselves readers who is of course we know where
they had been makes big bucks for several years and uh… that’s gone by
the wayside since then so fine balance we’ve learned now by
adding the uh… invincibility into this equation it firms resources are valuable rare which we looked at before like the resistor then they can expect a short-term
competitive advantage they’ll do well on the short run and still you know perfect competition sets that
argument imitators jump in and there are a lower price and i think
reset but if you have they’ve resource such as
being of the brand the molecule the reputation of the same best selling
drugs in the world i think what the force that was about to run out if they are if they can say yes to being
valuable rear cost to imitate yet probably impossible
right now than usual firms who on what the files are in
bristol-myers squibb expect to enjoys a sustain content dancer long-term but if
and only if they’re organized properly by organize neend is the infrastructure
and marketing et cetera human resources behind the company uh… solid and
you’ve certainly advisor and bristol-myers day they certainly are and
so i spend very little time on this organization part apple uh… e is organized in such a way to support
that which they sell so it’s three m so thirty your control mechanisms of
structure aligned support the product they should do well reporting structures
management control et cetera all of these together can cropped up and support they firms valuable rare innocent uh… non into building of a
resource then they should be able to take care of they sustained competitive bidding to
take advantage of that celeste everything we everything together that
we think we know about competitive damaged in terms of the
screen working with the economic implications of them the case of kmart you know i i i wonder aloud what this
valuable about k_-mart when the vacancy in the target and wal-mart arenas uh… i don’t think anything i you target
differentiated target is perception of law higher quality of old differentiated
product line clear whiter whites are files from the store uh… you warm marketers a little bit different and that there
are no more no frills but the perception of lower price list and i
have to offer and the context of those two but i can’t
see anything of value yet what puts competitively k_-mart at a disadvantage
of economic implications uh… would be that they would below
normal returns and indeed k_-mart is business on the back a few protection we go back to sonic having some value because they have a
differentiated product line with uh… with curbside uh… takeout in the car menu items or some
differences you could expect a company like that at least to be on par
competitively to have a small custody of these smaller
fast res and therefore you can expect economically building okay k going back one last time to our our
friends the spirit bear down and have a temporary advantages over competitors or
temporary advantage over no one since no one competed against them the first
three years and they’re going to do well in the short term in this class is really about getting to
the long term how can we make this work for a long
time valuable branding yes rare certainly mcdonald’s more stores anyone
else carson imitate probably impossible because of this is when the top brands
in the world they’ve made three cents uh… big
question to the company of the coffee market uh… and therefore the coffee market
brought them the breakfast market which the highest growth part the fast wound so mcdonald’s has you know enjoyed all parts of this acronym uh… which they
can answer yes to which would get the sustained long-term content vintage and
then economically basis sustained long-term uh… above normal profit
impedance mcdonnell stock prices done better than
most severing the dow over many many years regardless of the
stop and downs we have often are common in an optional