Barney's take on competition and business strength ( (Key success…
Barney's take on competition and business strength
positioning vs RBV
risk competing with those who already have the resources
better to consider your resources first (i.e. skills, assets, finances, capabilities, relationships, etc)
may not have the resources required to compete
Key success factors (KSF) = functions, resources and activities that create value for the customer and allow for success as a business. Tools to help identify KSF include:
Value systems (internal + external)
Value chains (internal)
SWOT + TOWS
resource based view (RBV) = competitive advantage + superior performance is achieved through distinct capabilities+resources
More relevantly, Barney suggests a VRIO analysis to determine if the capabilities have what Barney deems as the qualities required to be the strategic capabilities (i.e. giving SCA).
tools analysing the external environment have developed better than those analysing the internal strength + weaknesses
important to recognise sources of competitive advantage
high performance in unattractive environment
know your SCA - cleaning company's customers liked the way drivers handled garments and this was discovered at a time when they were about to outsource their drivers
Knowing your KSF, SCA and with the RBV can also help decide where their competencies, people, skills, resources, knowledge, etc can stretch into e.g. face a new threat or produce a new product.
The resource-based view (RBV) considers how distinctiveness of allocation of resources and capabilities influences SCA and superior performance of an organisation. Barney moves to talk about resources as a means of understanding the internal strengths whereas deficiencies in resources are potentially internal weaknesses.
3 VRIO dimensions = temporary advantage
2 VRIO dimensions = competitive parity
4 VRIO dimensions = source of SCA
1 VRIO dimensions = ncompetitive disadvantage
What is VRIO?
Coca-cola, for example, is rare as only they know it, and inimitable as there could be a range of ingredients and methods that created the final product (i.e. Coca-Cola).
A VRIO analysis determines the strength of an organisation. For example:
Not being rare will put the capabilities at risk as anyone can adopt or utilise them
Being easily copied again will allow competitors to mimic them
Not being of value will mean less sales therefore less revenue
Lack of support means that customers are not likely to buy something that is not universal hence they will struggle to get the necessary support
the four criteria used to assess if the capabilities have what is required to form the unique SCA
Rare – it should not be common place amongst other organisations particularly competitors
Inimitable – it should be difficult or almost impossible to mimic
Value – it must give value for the customers and still make a profit for the organisation
Organisational support – the necessary support network must exists for the capabilities and for the customers