Sincerely from my bottom of heart, I hope all my readers are doing okay. Today’s update, I would like to continue my posting and sharing about what I have learned in my Strategic Management and Operation class for this week. The topic that I mind to sharing today is the Elements of Strategic Management which I will focus on Competitive advantages.
What is the competitive advantage?
Competitive advantage allows an organization to outperform its competitors. An organization gains competitive advantages when they are able to perform or doing an activity that other company are unable to duplicate them. While sustained competitive advantages refers to a competitive advantage that an organization can maintain for a long period of time.
In this topic, I learned about Resources-based-view which is strategic management idea that each firm has their own unique and possesses resources and capabilities that provide the basis for its competitor advantages. Resources are referring to inputs such as equipment, human resources or process and that input can be a production process. They can be divided into 3 categories: tangible, intangible and human resources.
Tangible resources are assets that can be seen such as materials while intangible resources are assets which we cannot be seen such as knowledge. Human resources will include people’s skills, abilities and experiences.
According to RBV theory (resources-based-view), a resource can only be a source of competitive advantages when it is unique. A characteristic of unique resources are:
HARD TO IMITATE AND SUBSTITUTE
ORGANIZATION HAS THE ABILITY TO EXPLOIT THE RESOURCES
The more of such qualities the resources has, the more important it is a source of competitive advantage.
This is the explanation of the V.R.H.O
Valuable would answering the question of does the resource create value for the firm in delivering the firm’s products and services.
Rare is something that we find that the current or potential competitors possess this resources or not. A resource should be rare to be a unique and valuable.
Hard to imitate and substituted is a resource that we find it is hard for the current and potential competitors to develop a substituted for this resources.
Organized to exploit is the question regarding does our firm have the necessary systems, policies, procedure and processes to take full advantages of this resources in order to develop it into a competitive advantage?
To become a good organization and to have the strength among the competitors, a firm should follow the RBV Theory to gain the innovative resource and gain profits for the company. That’s all from me for this week lesson, till then wassalam.