The Resource Based View Of A Firm (Tesco.Com)

4990 words - 20 pages

RESOURCE-BASED-VIEW OF A FIRMLITERATURE REVIEW 3Introduction- What is the Resource-Based-View of a Firm? 3Resource-Based-View -Background 3Resources & Capabilities of a Firm 4Firm Resources & Sustainable Competitive Advantage 5Value 5Rareness 6Inimitability- Is it hard to copy? 6Non- Substitutability 7Durability 7Imperfect Mobility 8Appropriability- Who captures the value the resource creates? 8Competitive Superiority 9The RBV of a Firm's Ability to Innovate 10Conclusion 12CONTEXTUALISATION: RBV AND TESCO.COM 14Introduction 14Tesco's Resources 14Tesco Clubcard 14Use of Existing Retail Stores as Distribution Centers 15Technology Partnership with Interwoven 16Conclusion 17REFERENCES ...view middle of the document...

Towards the end of the 1980s, there was increasing dissatisfaction with Porter's Forces Model which had dominated that decade. This model concentrates its emphasis at an industry level. This led to the emergence of the RBV of a firm which acknowledged the importance of company specific resources in the context of the competitive environment.The concept of firm's resources heterogeneity is the basis of RBV. The significance of this concept as a new direction in the field of strategic management was largely recognized in 1984 with the article "A resource-based view of the firm" by Wernerfelt which in 1994, was awarded the Strategic Management Journal best prize indicating that RBV was now a vital part of strategic management literature. He suggested that evaluating firms in terms of their resources would lead to insights that differ from conventional perspectives.In 1991, Barney developed this concept further and developed a framework to identify the characteristics of resources needed to generate sustainable competitive advantage.Resources & Capabilities of a FirmOne of the main principles of RBV is that all resources are not of equal importance. More emphasis is placed on the characteristics of advantage-creating resources. These resources can be divided into three groups: physical capital resources, human capital resources and organizational capital resources (Collis & Montgomery, 1995).Physical capital resources are the physical technology used in a firm such as equipment, raw materials and geographic location. These represent the tangible assets of a company. Human capital resources are the training, experience, judgment, intelligence, relationships, and insights of individual managers and workers in a firm. Organizational capital resources include the firm's reporting structure, its formal and informal planning, controlling and coordinating systems, as well informal relations among groups within a firm and between a firm and its environment (Barney, 1991). However, it is important to remember not all of these resources may be relevant. The RBV of a firm is only concerned in resources that can be a source of sustained competitive advantage for the firm.Firm Resources & Sustainable Competitive AdvantageA firm has a sustainable competitive advantage when it implements a value creating strategy that is not being implemented by another competitor and cannot be copied by another firm. As all resources are not of equal importance or possess the potential to be a source of sustainable competitive advantage, it is important to be able to characterize the relevant resources. Barney (1991) suggests that these resources must meet four conditions; value, rareness, inimitability, and non- substitutability. Collis and Montgomery (1995) proposes that these advantage-creating resources meet five tests; inimitability, durability, appropriability, substitutability and competitive superiority.ValueA resource can only be considered a source of...

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