business strategy lecture 3 l.
Skip this Video
Loading SlideShow in 5 Seconds..
Business Strategy Lecture 3 PowerPoint Presentation
Download Presentation
Business Strategy Lecture 3

Loading in 2 Seconds...

play fullscreen
1 / 15

Business Strategy Lecture 3 - PowerPoint PPT Presentation

  • Uploaded on

Business Strategy Lecture 3. Resources and Competitive Advantage John Birchall. The Resource-Based View of Business Strategy. Less a toolkit than a way of seeing: inside-out rather than outside-in (de Wit & Meyer 2005) Key theorists: Hamel & Prahalad (1994), Barney (1995)

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

Business Strategy Lecture 3

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
business strategy lecture 3

Business Strategy Lecture 3



Competitive Advantage

John Birchall

the resource based view of business strategy
The Resource-Based Viewof Business Strategy
  • Less a toolkit than a way of seeing: inside-out rather than outside-in (de Wit & Meyer 2005)
  • Key theorists: Hamel & Prahalad (1994), Barney (1995)
  • Firms can create or change their environment
  • Start by looking inside the firm itself
  • Develop distinctive strengths: resources and capabilities
  • Use these to build core competenc(i)es
  • Change the rules of the game

…and win!

  • Resource-based approach improves operational effectiveness, but is it strategy? (Porter,1996)
    • Operational effectiveness: doing the same things better, usually at functional level
      • is often cost focused
    • Strategic innovation: doing new things in ways that span functional boundaries
      • Can deliver a unique form of value (differentiation)
  • If we focus on our strengths, will we lose sight of customers and competitors?
  • How can we guard against complacency?
identifying resource strengths
Identifying Resource Strengths
  • Main categories: tangible/intangible
  • Physical assets are tangible
  • The skills needed to make use of them are intangible
  • Many assets cross categories
  • Relationships can be the most valuable assets of all
competences and capabilities
Competences and Capabilities
  • Michael Porter’s breakthrough book

Competitive Advantage (1985)

    • Looked for internal strengths
    • Invented a key analytical tool: The Value Chain
    • Talked about capabilities
    • Examples: relationships, reputation, innovation (Harrison 2003: 102-108)
  • Hamel & Prahalad’s bestseller

Competing for the Future (1994)

    • Similar ideas, different attitude
    • Talked about competencies
    • Examples: delivering consistent quality, responding fast to customer orders (Harrison 2003: 76-78)
which is most important
Which is most important?
  • The experts disagree,

so you can decide

  • Where there is debate, there is freedom to make up your own mind
  • When you do your research, you gain confidence in your own opinions
  • When you work through a case analysis, you begin to see how ideas relate to evidence
  • Evidence can be used to suggest which ideas are most useful
analyzing internal resources harrison 2003 ch 3
Analyzing Internal Resources(Harrison 2003: Ch. 3)
  • Look inside the organisation and assess your resource advantages
  • Use the Value Chain: review the way resources are deployed
  • Given existing technology and markets, are you effectively turning resource advantages into competitive advantage?
  • Add dynamism by bringing in leadership and learning
  • Aim for the future, not for the benchmarks
examples of firm resources and capabilities harrison 2003 75
Examples of Firm Resources and Capabilities (Harrison 2003: 75)



Superior CEO characteristics

Experienced managers

Well trained, motivated, loyal


High performance structure or culture

Excellent cash flow

Strong balance sheet

Superior past performance

Strong links to financiers

Knowledge / Learning

Superior technology development

Excellent innovation processes / organizational entrepreneurship

Outstanding learning processes


State-of-the-art plant or machinery

Superiority in a value-adding process or function

Superior locations or raw materials

Outstanding products and/or services

General Organisational

Excellent reputation or brand name


Exclusive Contracts

Superior linkages with stakeholders

what makes a resource strategic
What makes a resource strategic?
  • Value – can create this for customers
  • Rarity – competitors may not have it
  • Hard to copy or substitute

If all three qualities are present, we have a

  • strategic resource
  • core competence
  • distinctive capability

and can use it to build and sustain…

if all or most competitors have a resource
If all or most competitors have a resource…
  • It can still be valuable
  • It could even be necessary : essential for survival
  • A competence of this kind is called a threshold competence

(Johnson, Scholes and Whittington 2005: 119-120)


Managing the Process of Resource Use (Harrison 2003: 83)

Administration (Firm Infrastructure)

Human resource management

Support activities



Resource procurement





Inbound logistics



Value Chain

Primary activities

strategic leadership
Strategic Leadership
  • Create organisational vision
  • Establish core values and culture
  • Develop a management structure
  • Foster organisational learning and development
  • Serve as a steward for the organisation
  • Build team relationships
  • Link the whole chain together
  • Unite the system
  • Require orchestration and leadership
  • Are hard to copy

Relationships between firms

    • Improve flows of goods and information through the system
    • Change the rules of the competitive game

Supplier value chains

Channel value chains

Buyer value chains

Organisation’s value chain

Relationships between Firms:

Porter’s Value System

(Porter 1998: 140)

strategic thinking
Strategic Thinking
  • Deployment of resources
  • Strategic competences
  • Value chain and value system