The paper 'Strengths and Weaknesses of Resource-Based View and Competitive Positioning View of Strategy" is a good example of business coursework. Resource-Based View (RBV) refers to a management tool that determines strategic resources in a firm. This model views a company as a bundle of resources and what differentiates one company from another is in the way they combine their resources to deliver products and services in the market (Barney 1986). This model also states that particular resources controlled and possessed by a company have the ability to generate competitive advantage and hence the company is in a better position to perform better than the other companies in the industry (Barney 1991). The resource-based strategy has its own strengths that keep ahead of other models.
It highlights the need for finding a fit between the external market within which the firm operates and the firm’ s internal resources and capabilities. This model assists to explain why it’ s more advantageous to generate some resources than others. It also explains why resource asymmetries and subsequent competitive advantages survive even in open competition. Instead of looking for profits at the match of the company’ s product and the market, RBV model aims at delivering value using the company’ s capabilities, resources and its core-competence (Drucker, 1963). This model emphasizes that what differentiate one firm from another is in the way they allocate resource which is valuable to the firm, rare which means that they can deliver a unique strategy against the other firms, inimitable that means that other company cannot easily imitate them and are non-substitutable.
Resources that have those characteristics give the firm a competitive advantage. Another one of the strengths of RBV model is that it focuses the company’ s internal environment in relation to the firm's capabilities and resources and its importance in determining the strategic action as compared to the external environment.
It implies that the basis for a strategy lies in a firm’ s unique resources and capabilities. This business strategy helps to exploit the core competencies in relation to the opportunities in the external environment (Hamel & Prahalad 1994) However, this model also has some weaknesses despite their strengths. Although resources can be bought, this model argues that in order to achieve competitive advantage from the resources, they have to be internally developed.
This development, however, takes a very long time and is ambiguous on how to proceed (Dierickx & Cool, 1989). While it’ s important that companies are different from one another and have different resources, it’ s also important to note that the market is important as well. The challenge of using this model is identifying opportunities that are a perfect match with the resources available in the company to gain a competitive advantage. According to Levitt (1960), it is also difficult to come across a resource that meets or the characteristics of VRIN.
Also, different resources can be allocated but still produce the same value as other firms and hence not able to create a competitive advantage. Moreover, there is an assumption that a company can generate profit in a very competitive market as long as it keeps on exploiting the unique resources which might not be the case. This model ignores the external environment as pertains to the industry as a whole. The market keeps changing and this means that the company resources should also change to meet customer requirement.
This has not been considered in this model as its emphasis is on the development of the available resources to create competitive advantage (Teece, Pisano, & Shuen 1997).
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