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Identifying Valuable Resources VIRN *Source:Barney,J.B.1991 Valuable, Rare, Imperfectly imitable,
Non-substituable* RBV Resource-based View What is a Valuable resource?
A valuable resource must
Generate rent (Revenue) stream from a product market
Contribute in the creation of a product or service that has value to customers What is a Valuable resource?
A resource or resources?
Past, Present or Future Value?
Objective or subjective?
Cost of resources(Procurement,development and operating cost)
Shareholder Value(Opportunity cost) Study 2: The resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation Objectives Resource-based Theory Organization can be regarded as a bundle of resources (Barney, 1991; Amit and Shoemaker, 1993) and that resources are an organization's main source of sustainable competitive advantage from which sustained performance results. Resources are inputs into the production process. 6 major resources Competitive Advantage Walt Disney Case :
Sustainability of competitive advantage Identify the key concepts of Resource-based theory
Understand the implication of Resource-based theory by some cases
Explore the limitations of Resource-based theory Sustainability Group view -an organization is a bundle of resources Key Problems Definition: Why be concerned about Valuing Resouces? Help managers have a better understanding, not only based on experience
Avoid destroy resources by carelessness
Build relatively competitive performance in the specific market RBV is concerned with relative performance—— Valuable resource is relative performance Cost disadvantage Competitor behaviour Relative unit cost Total costs Cost reducing Resources Profit flow Average margin Average price Sales Volume Relative Product PUV PUV enhancing Resources Customer behavior PUV disadvantage Competitor behaviour The Impact of Resources on Profit Flow Three Resource-Based Competitive Advantages Exploiting Cost Advantage Case: Ryan Air Exploiting PUV Advantage Through Premium Pricing Case: Innocent Drinks ——the UK’s leading smoothie brand, which dominates the market with a over 70% share. Exploiting PUV Advantage Through Superior Sales Volumes Case: Amazon.com Buying power Brand & Trust Cost management Competitive Disadvantage failure even to satisfy the minimum success requirements
Relative as well
No margin improvements=When competitive disadvantages overweigh the effects generated from valuable resources PUV Disadvantages Cost Disadvantages High
Bargaining power Exogenous Changes Changes in competitor behavior
Changes in customer behavior ACCESS Q&A? Thank You