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Strategic Resources And Firm Performance Management Essay

In the age of the changing turbulent environment, competitiveness is essential for superior performance in the global business context. The critique aspires to provide a critical evaluation on the relationship between proper resources, firm's performance and a sustainable competitive edge. Hence, the resource-based view (RBV) evaluation is explored to verify the positive approach to the idea that RBV has a strong link with firm's performance especially in attaining a sustainable competitive benefit (SCA). The critique examines how and under which conditions resources can attain SCA. The merits and demerits of the RBV as the 'best' strategy process in the growth of any firm's strategy are talked about to fortify the acceptance of the contention that the RBV has a strong connection with the firm's performance. Furthermore, the issues as to how and why do some businesses outperform and maintain their competitive benefit are evaluated to regulate how and to what magnitude they influence firm competitiveness. In order to accomplish the principal goal of the critique, the subject of the talents and weaknesses of the RBV way in attaining SCA and the contribution to firm-level value creation are examined. Prior to delivering the critique, the RBV analysis and Porter's Industry research are reviewed consequently through the application of real life configurations with comparisons of implied advantages and possible constraints.


The reason for the critique which is dependant on this article 'Strategic resources and organization performance' (Anderson, 2011), is to simply accept or reject the contention that resource-based view evaluation (RBV) has a solid romance with firm's performance especially in attaining a sustainable competitive advantage (SCA). Adopting the notion of the resource structured view (RBV) of the firm's strategy; this critique seeks to show the positive approach of RBV by critically analysing the partnership between the organizations' resources and performance.

The RBV examination has been defined by Johnson et al. (2008) as 'the competitive advantage and superior performance of an organization described by the distinctiveness of its capabilities. ' RBV stresses on internal features of the company in formulating strategy to achieve a lasting competitive advantages (Penrose, 1959; Rumelt, 1991; Barney, 1991; Give, 1991; Peteraf, 1993). Proper resources are evolved through organisational learning and are heterogeneously distributed among businesses. Resource-based research which serves instead of the market-based evaluation can best rationalise company performance. Studies also show that the relationship between proper resources and firm's performance is complicated (Coff, 1999; Ray et al, 2004, Sheehan and Foss, 2007) as all businesses are reliant on the possession of resources which is valuable, unusual, imperfectly mobile, and non-substitutable (Barney, 1991) to accomplish high performance. This is categorised as the VRIN criterion to identify resources further. However, based on the FMMAD-criteria and the VRIN standards, the combination of resources for RBV allows firms to enhance or maintain their competitive benefits over opponents.

Merits and Demerits of Source of information Based View (RBV)

Scholars dispute that RBV is the "best" strategy course in the development of a firm's strategy, hence, acquiring its relative merits. Collis and Montgomery (1995) assert that the RBV strategy identifies characteristics which can create competitive advantage for the organization such as value, rareness and competitive superiority. However, Anderson (2011) suggests an alternative solution to Barney's view. The FMMAD-criteria which includes fit, management capabilities, marketing capability, organization appropriation of hire and non-competitive cons should be implemented and blended to positively utilise resources and achieve superior performance in a firm thus, resulting in becoming less tautological. Barney's (1991) discussion struggles to fulfil all measurements of the relationship between firm's proper resources and performance. As a result, the markets dominance comprising of technology behaviour, brand acceptance or cost leadership is believed to be able to influence industries to determine a superior competitive position (McNeilly, 1996). For example, Wal-Mart has succeeded with the Retail Hyperlink and the offer of low priced (Parnell, 2008) was predicated on cost command and aligned SCA with profitable strategy (Johnson, Scholes and Whittington, 2010). Consequently, Wal-Mart can build their effective and effective distribution system through its information writing system to achieve SCA. Additionally, the RBV allows companies to recognize which threshold resources to build up enabling them to complement the consumers' needs and preferences with the firm's valuable and strategic resources. The RBV way enhances the combo and utilisation of tactical resources to differentiate organizations in the market (heterogeneous) (Chulow and Gerstman, 2007). In addition, the RBV allows firms' to operate effectively, efficiently and less costly than competitors. This point of view is a significant divergence from the choice market-based view examination. Predicated on the heterogeneous view of RBV, several scholars argue that a organization should target more on how to structure operations and resources to make dynamic capability compared to the resources possessed (Eisenhardt and Martin, 2000; Newbert, 2007; Teece et al. , 1997). So, Toyota's production system shows JIT's inventory system as an inventory-based strong capacity through the addition of capacities and functions of key suppliers (Schonberger, 1987). This allows them to accomplish a competitive gain over their challengers.

The demerits or criticisms of RBV as the 'best' proper process can be evaluated. Priem and Butler (2001) assert that the RBV evaluation assumes that the product market is stable and ignores the true value of the resources. As stated, RBV is known as to be tautological. Predicated on the Porter's industry analysis, Porter (1991, 1996) argues that the RBV does not approach the question of explicating the process by which merit was created, which activities should be a more applicable concentration than resources. Also, Hoopes, Madsen and Walker (2003) criticised RBV for not having the ability to provide tangible translations for operating firms. Furthermore, the RBV procedure appears to be limited with small implications as the proper role of management are regarded to be a process alternatively than from the functional functions of the firm's resources (Clulow, Barry and Gerstman, 2007). Companies have a tendency to acquire resources that are time-consuming with uncertainty for competition to imitate or duplicate through complicated connections between resources. However, energetic capabilities provide as an expansion of the RBV analysis to incorporate a better knowledge of how merits are acquired and maintained over time. Also, the RBV's ambiguity and duration boosts the development that increases the value of resources and potential sustainability of competitive edge.

Maintaining a Competitive Advantage

The issues concerning why do some firms outperform and maintain their competitive gain arises. Firms can perform sustainable competitive benefit (SCA) and surpass competitors through the RBV examination which is to build up their resources internally. Matching to Pertusa-Ortega et al (2010), resources are secured by patents, trademarks and property privileges while some are guarded by concealed factors that produce imitation complex. Additionally, firms are reported to be able to identify which resources to structure via the VRIO standards in order that they may support competitive edge (Barney, 1986). So, Toyota, the major car manufacturer, is well known for their development of interior resources and achievement in increasing quality, efficiency and minimizing inventory all together. Toyota has their own operating-system and capabilities like the 'kanban' inventory system which supports those to differentiate in planning, quality and customer support to preserve its competitive advantage (Sugimori, Kuunokim, Cho and Uchikawa, 1977).

Strengths and Weaknesses of RBV Analysis in attaining SCA and Firm-level Value Creation

Barney (1991) affirmed that a firm is regarded as to achieve sustainable competitive advantages over competition through the implementation of strategies which exploit internal talents in response to environmental opportunities. Together, inside weaknesses can be avoided and external threats are neutralised. In essence, the RBV analysis links to the contribution to firm-level value creation through the exploration of competencies and obtaining required benchmarks of international competition. The RBV strengthens our knowledge of the initial resources that induce value (Barney, 1991). For example, Walgreens could provide value through competencies to offer desired value by its aim for customer group. Inevitably, Walgreens constant value creation through the give attention to the strategic capabilities is the foundation of the firm's potential revenue of profitable results (Hoskisson, Hitt and Ireland, 2004). The RBV allows a company toidentify current talents to the level of which resources is a strong capacity to create more value and generate powerful (Helfat et al, 2007). The high value creation enables businesses to appropriate more rent by retailing its products and services proficiently. Besides this, Honda is apparently another firm following the RBV procedure. Honda achieved SCA through their functional Just-In-Time and ERP system. They developed strategy about the firm's durability in dynamic gasoline-based motors. Also, Honda's development and production competes in differentiated product markets, but leverages one common resource with the ability to appropriate more rent (Robert M. Give, 2005).

However, there are a few weaknesses to the RBV strategy in attaining competitive benefit. The RBV supports that, strategic resources must provide economic value to realize competitive advantage. For instance, as the auto industry goes through changes in the time of turbulent environment, the progression in design features, customer segmentation and niche market market segments such as customers with preference for cross vehicles advances further (Power Report, 2003). In addition, Toyota participates in long-term intangible resources such as branding to appropriate hire. This enables Toyota to identify themselves from their competitors (Ragassa and Ahmadian, 2007). Furthermore, Zubac et al. 2009 expresses that it is important for businesses to comprehend just how resources become valuable once managers understand the idea of their customer value. The RBV doesn't have the definition of customer value that can be refined within the organization. However, it is said that in progression of value creation, overemphasizing customer value prevent firms from targeting customer groups. For example, HP was prominent in the program market which made other organizations consider HP's next step before making decisions to go forwards. However, IBM outperformed HP because HP ignored future customer probable and their opponent's durability. Instead, HP unintentionally helped IBM to convert and become more alert with the hazard posed, thus, making IBM place more concern on the danger (McNeilly, 1996). Hence, IBM seems to have leveraged and varied their intellectual capital in recent years.

Resource Based View vs. Porter's Industry Analysis

Although there have been advancements in Porter's Industry examination which revolves around five competitive makes and the general strategies of cost control, product differentiation and emphasis, the RBV procedure appears to be the 'best' strategy path for firms to realize a sustainable competitive advantages. Porter's Industry examination describes external environmental conditions which assist to improve strategic positioning and provide logical insights to support and stabilise decisions to type in or exit a business. Firms in a industry have equivalent strategic resources which are highly mobile, hence, homogeneous (Porter, 1998). However, regarding to Miller (1992), the specialisation in detailed strategy may bring about the limitation of the firm's mission as it may create gaps and offer differentiated products while ignoring customers' essential needs. Also, extreme specialisation in expense leadership may lead to obsolete products which customers might want to dislike.

In compare, the RBV methodology allows a company to identify its own strengths rather than emphasising on the firm's exterior environment. The ideas within competitive heterogeneity have a confident effect on the limits regarding RBV. For instance, mobile provider companies namely, Nokia and Samsung make an effort to contend with the Apple Inc's dominant iPhone. Efforts to imitate the iPhone have created a distinct segment market to outperform the dominant firm. Therefore, it can be generally accepted that Porter's Industry examination should not be used on its or declined completely. Instead, the external environmental evaluation should be utilized to complement the RBV analysis (Wright, Kroll, Pray and Lado, 1995).


In conclusion, it could be generally accepted that the RBV strategy has a strong romance with firm's performance especially in attaining a lasting competitive benefits (SCA). Also, Porter's Industrial research can be used to go with the RBV examination (Wright, Kroll, Pray and Lado, 1995). The RBV evaluation enables businesses to utilise their resources, thus, adding value to the organization. In terms of recommendations, the definition of customer value should be a necessity to the RBV evaluation as this may make higher value and performance. Besides this, the RBV research allows a firm to identify strategic resources through the VRIN and FMMAD-criteria (Barney, 1991). However, some criticisms of the RBV are approached with regards to the down sides experienced by companies to establish SCA. Companies cannot afford to target solely on the expense of their internal resources and exclude opportunities to achieve SCA. The RBV implicitly assumes that companies utilise their resources to maximise the appropriation of rent where competitiveness is concerned. Therefore, the resource-based view examination remains important as businesses cannot neglect the internal operations of a company.

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