Discuss the Similarities and Differences Between the Resourced Based View of Strategy and the Industrial Organisation (I/O) Based View of Strategy

2032 Words Jan 14th, 2012 9 Pages
Discuss the similarities and differences between the resourced based view of strategy and the industrial organisation (I/O) based view of strategy

The similarities and differences between the two views of strategy, resource-based view (RBV) and industrial organization (I/O) view will be critically discussed. According to Hanson, et al. (2011), the RBV model specifies a firm’s strategy internally to earn above-average returns based on its unique resources and capabilities. Resources such as capital equipments, individuals’ skills, patents and finances are formed into a capability and is managed dynamically to achieve competitive advantages over its rivals. The I/O model specifies a firm’s strategy based on external environment with the
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Therefore, for-profit organizations should also focus on external factors such as product differentiation and technological advance. As mentioned above, the RBV view focus on the firm’s internal factors by looking at the resources and capacity and integrating them to the four criteria of sustaining the competitive advantages. Lockett, Andy, Thompson, Steve and Morgenstern (2009) said valuable resources can be used to explore the opportunities and rare resources means the limited supply which are unequally distributed through the firm. Non-substitutable resources are unique resources which cannot be replaced by others and non-imitable resources cannot be replicated easily by other firms. To maintain the competitive advantages, the firms should develop intangible assets which are more suitable to meet the four criteria. The for-profit organization should build high reputation in the market and try to competitive advantage over its rival. The reputation is generated inside the firm over time due to its potential benefits to the customers and therefore, it cannot easily be imitated and also substituted. In other words, it is said to be rare and valuable. By doing the internal analysis, the firm will also realize its weakness such as the product faulty and have opportunity to cover its cost. For example, Apple provides services for evaluation and replacement of chargers

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