Week 9

WEEK 9

In your own words and using referenced quotes describe what is meant in strategy  by the “resource based view”.

“Resource based view” is a management device used to assess the available amount of a business’ strategic asset. It is based on the idea that the effective and efficient application of all useful resources that the company can gather which helps to determine its competitive advantage. According to Mwailu & Mercer, 1983, “the resource based view (RBV) as a basis for a competitive advantage of a firm lies primarily in the application of the bundle of valuable interchangeable and intangible tangible resources at the firm’s disposal”.

Organization may have resources in the form of tangible goods such as assets, intangible goods such as brand name, human resource and capital. The resources of the organization have its own importance but the point of importance is that how they are used. In strategy, resource based view refers to the strategy formulation so that competitive advantage is gained over others by focusing on how effectively and efficiently the organization’s internal resources and capabilities can be used. Each and every organization has same or similar resources but what makes difference is that how these resources are employed by the organizations.  (RM Grant, 2001).

How might you undertake internal strategic analysis? What models would you apply and why? Where would you go to find information you need?

Assessing the internal factors of the organization such as resources, competences, goals and objectives, structure and system etc is known as the internal strategic analysis. This process helps to  identify the performance of the business according to the change in the external environment and its strategic capabilities which can be used to gain competitive advantage.

In order to undertake internal strategic analysis there are different models available. Some of them are:

Ø  McKinsey’s 7s Model

Ø  VRIN Model

Ø  Value Chain Analysis

Ø  SWOT Analysis

McKinsey’s 7s Model

In this model, 7s comprises of Skills, Staff, Strategy, Style, Shared Values, Structure and Systems. McKinsey’s 7s Model assess all the aspects that are internal within the organization. It helps to identify how the organization is performing as the strategies are implemented using staffs and skills as well as the shared value and whether the structures and systems are well-suited or not. (Annmarie Hanlon, 2012)

VRIN Model
 V stands for Value, R stands for Rarity, I stand for Inimitability and N stands for Non-Substitutability. VRIN model helps to identify the organizations’ key resources and strategic capabilities. The resources and capabilities can be used in a way that no other organization can either copy or imitate and is rare. After this the organization gain competitive advantage over others as these resources helps to form core competences. (Anita Talaja, 2012).

Value Chain Analysis

Value chain consists of a chain of activities starting from extraction of raw materials to supplying final products. Value chain analysis is the analysis of activities which add value within the chain, relationships between the activities and those activities that can be seen in terms of the strengths of the organizations.

Value chain analysis divides value chain into different group of activities, identifies the activities of the value chain that are best or worst, identifies the activities that have competitive advantage, add value to the product, decrease the value chain of the organization and develop strategies which utilizes the activities and other resources within the value chain. (Ovidijus Jurevicius, 2013).

SWOT Analysis

SWOT analysis refers to the identification of strengths, weaknesses, opportunities and threats of the organization. Identification and analysis of strengths and weaknesses are the internal analysis of the organization whereas identification and analysis of opportunities and threats are the external analysis of the organization. This analysis helps to identify the strengths which can be used to get the opportunities in the external environment of the organization and to overcome the weaknesses as well. It also helps to identify the organizations’ weaknesses which must be overcome.

Reference:

RM Grant . (RM Grant - ‎2001 ). The Resouce Based Theory. Available: http://www.skynet.ie/~karen/Articles/Grant1_NB.pdf. Last accessed 25/04/2013.
Annmarie Hanlon. (2012). How to use the McKinsey 7S model in marketing. Available: http://www.smartinsights.com/marketing-planning/marketing-models/mckinsey-7s-model/. Last accessed 25/04/2013.
Anita Talaja. (2012). TESTING VRIN FRAMEWORK: RESOURCE VALUE AND RARENESS AS SOURCES OF COMPETITIVE ADVANTAGE AND ABOVE AVERAGE PERFORMANCE . Available: http://www.efst.hr/management/Vol17No2-2012/3-Talaja.pdf. Last accessed 25/04/2013.
Ovidijus Jurevicius. (2013). Value Chain Analysis. Available: http://www.strategicmanagementinsight.com/tools/value-chain-analysis.html. Last accessed 25/04/2013.