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

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Presentation on theme: "MJF7 Strategy concepts overview (2): Resource based view of the firm."— Presentation transcript:

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


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