The paper 'Resource-Based View of Strategy and the Competitive Positioning Based View of Strategy' is a perfect example of a Business Case Study. A number of subsequent studies have attempted to compare resource-based view and competitive based view of strategy; with some suggesting the use of both strategies in order to minimize risk emanating from each while maximizing the benefits. This paper seeks to study the two perspectives on strategy with a view of gaining a better understanding of the same. Review of literature This section includes a review of journals discussing the strengths and weaknesses of each school of thought. The resource-based view of strategy (RBV) Gallaugher (2007) in an attempt to establish the best strategy for internet business notes that the use of a resource-based view strategy is bound to be highly effective.
In his research, Gallaugher (2007) starts by identifying that firms using a resource-based view can only be seen to earn more potential returns only if they have superior resources and if these resources are protected from diffusing throughout the industry. This is possible in online businesses where assets such as scale, network effects, distribution channels, switching costs, and data are not easily transferable.
In Fahy and Smithee (1999) however, competitors’ inability to duplicate resource endowment is also questioned due to uncertainty inimitability and causal ambiguity in the use of terminology in RBV literature. Another advantage identified by Gallaugher (2007) is that RBV helps in shaping the managers’ thinking about strategic positioning by evaluating the firm’ s resources. Despite praising RBV, Gallaugher notes that RBV limits the firms’ ability because it does not clearly identify the kind of differences that firms need to pursue to gain competitive advantage. In the article by Connor (2002), it is established that many studies have portrayed the importance of firm-level factors emphasized in the resource-based view as opposed to industry factors exemplified in competitive positioning view.
In essence, the success of the firm is mostly possible through the company perspective as opposed to industry perspective because eventual success is determined by how a firm uses the resources available to it in succeeding in the industry setting. This view is seconded by Rivard, Raymond, and Verreault (2005) who note that companies should create competitive advantage by exploiting resources that are available to them.
On the other hand, however, business survival lies in the understanding of the market and changes that are likely to emerge (Connor, 2002). It is therefore established that the RBV strategy may not provide for such information in a manner that CPR is likely to do. Further, RBV does not provide the ability to scan the environment in order to learn the possibilities of developing new products and capabilities. The RBV is considered a strategy that is highly dependent on the management and therefore failure by the management may result in poor strategies.
Fahy and Smithee (1999) note that since strategic assets and resources are essentially intangible, it raises a question on how managers can define, recognize, and shape these resources. RBV is therefore ineffective in strategy. Rommen (2009) establishes a weakness in the resource-based view in that it consists of many assumptions and definitions which often cause ambiguity or difficulty in adoption. An example of an assumption is that firms can differ in terms of resources that they control and that they may not be transferred between organizations.
This however can be disapproved by the fact that resources cannot be said to be immobile or heterogeneous. Rommen (2009) identifies another weakness in that the resource-based view ignores the external environment by focusing on organizational attributes or an inside-out perspective. Further, the resource-based view is seen as viewing things from a static perspective and having limited applicability since it sustainable competitiveness can only be achieved where there are available finances to enhance possession of unique resources.
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