With the emergence of concepts like core competences, the focus of gaining competitive advantages has swung from external environments towards a company’s internal resources (Collis & Montgomery, 2008). It traces the roots of competitive advantage back to present level of resources and capabilities possessed by the company.
This leads us to a Resource Based View (RBV) of the company, where firms are considered or viewed as a bundle of heterogeneous resources and capabilities. In this respect, firms are all different as they possess a mix of distinct resources and capabilities. Naturally, gaining a competitive advantage can be credited to the ownership of superior resources by the company, which enables it to perform the activities in a better and efficient manner (Exhibit 5). For example, 3M has the capability of generating new ideas, developing and scaling them into new …show more content…
Elaborating further on the RBV, it mentions that resources can be categorized as physical, intangible or as capabilities. Going back to basics, a precious resource is one which is hard to copy, whereas, capabilities are skills employed by a company to use the resources and eventually produce the planned goods and services. For further clarity, in an organisation, we could say that managers are the resources, and their ability to make strategic decisions is a capability. Essentially, the term capability revolves around the procedures and expertise used in carrying out distinct activities to produce goods and services for the market. Walmart, a practical example to the concept, has capabilities in the field of logistics through which it transports goods effectively and efficiently even in remote locations. It has fully exploited its capability and
This leads us to a Resource Based View (RBV) of the company, where firms are considered or viewed as a bundle of heterogeneous resources and capabilities. In this respect, firms are all different as they possess a mix of distinct resources and capabilities. Naturally, gaining a competitive advantage can be credited to the ownership of superior resources by the company, which enables it to perform the activities in a better and efficient manner (Exhibit 5). For example, 3M has the capability of generating new ideas, developing and scaling them into new …show more content…
Elaborating further on the RBV, it mentions that resources can be categorized as physical, intangible or as capabilities. Going back to basics, a precious resource is one which is hard to copy, whereas, capabilities are skills employed by a company to use the resources and eventually produce the planned goods and services. For further clarity, in an organisation, we could say that managers are the resources, and their ability to make strategic decisions is a capability. Essentially, the term capability revolves around the procedures and expertise used in carrying out distinct activities to produce goods and services for the market. Walmart, a practical example to the concept, has capabilities in the field of logistics through which it transports goods effectively and efficiently even in remote locations. It has fully exploited its capability and