1. Strategic Management: Value Creation, Sustainability, and Performance, 3e, 2014 Resource-Based Competitive Advantage Chapter 6

2. 1. Compare types of resources, relationship to competitive advantage. 2. Difference between resources and capabilities. 3. Categories of resources. 4. How to analyze resources and capabilities. Learning Objectives

3. Tangible  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 Types of Resources

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

6. Dimensions of Extraordinary Resource ValuableIt is Valuable RareIt is Rare ImitationIt is difficult to Imitate SubstitutionIt cannot be Substituted for TradableIt cannot be Traded for VRIST

7. Sustainable Competitive Advantage

8. 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 Sources of Durable Advantage

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

10. Capabilities and Resources

11. 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 P&G's "Connect & Develop"

12. Raw Materials Suppliers Distribution Customers 50,000 R&D workers in 300 suppliers 70 technology entrepreneurs Connections are valuable, rare, inimitable, non-substitutable, non-tradable V R IST P&G's "Connect & Develop"

13. 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 Conducting a Resource Analysis