...Strategic Marketing and the Resource Based View of the Firm Strategic Marketing and the Resource Based View of the Firm John Fahy University of Limerick Alan Smithee Alloa Metropolitian University John Fahy is Professor of Marketing, Dept. of Management & Marketing, University of Limerick, Limerick, Ireland 353-61-213126 (office), 353-61-338171 (fax) John.Fahy@ul.ie. Alan Smithee is Senior Lecturer in Marketing, Alloa Metropolitian University, Alloa, Scotland. Please address all correspondence to the first author. EXECUTIVE SUMMARY The resource-based view of the firm (RBV) is one of the latest strategic management concepts to be enthusiastically embraced by marketing scholars. This paper argues that the RBV holds much promise as a framework for understanding strategic marketing issues but cautions that, before it is adopted, it needs to be fully understood. Consequently, the paper charts the development of the RBV from its origins in early economic models of imperfect competition, through the work of evolutionary economists to the contributions of strategy and marketing scholars over the past two decades. This broad literature base has given rise to a great deal of ambiguity, inconsistent use of nomenclature and several overlapping classification schema. The paper seeks to draw together common themes of firm heterogeneity, barriers to duplication, sustainable competitive advantage and Ricardian rents within an overall model of resource-based competitive advantage. The second...
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...managers as distinctive competencies – Institutional leadership as a distinctive competence • Ricardian economics • Penrose’s theory of firm growth Research on the skills of general managers, institutional leaders, economic rents and firm growth have been brought together to develop a rigorous model to analyze a firm’s strengths and weaknesses: the resource-based view of the firm The Theory Behind Internal Analysis The Resource-Based View • developed to answer the question: Why do some firms achieve better economic performance than others? • used to help firms achieve competitive advantage and superior economic performance • assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance The Resource-Based View Resources and Capabilities Resources: • tangible and intangible assets of a firm » tangible: factories, products ; intangible: reputation • used to conceive of and implement strategies Capabilities: • a subset of resources that enable a firm to take full advantage of other resources » marketing skill, cooperative relationships The Resource-Based View Four Categories of Resources • Financial (cash, retained earnings) • Physical (plant & equipment, geographic location) • Human (skills...
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...The theory of Industries Organisation and Resource-based view (RBV) has been the most commanding influence in the strategic analysis field for many years. In my opinion, the Barney’s (1991) Resource-Based view is the important factor in gaining competitive advantage for a multinational corporation. In order for a company to have a sustained competitive advantage over a period of time, they need to gain control and fully utilize resources and capabilities that are valuable, rare, inimitable and un-substitutable to the company (Barney and Hesterly, 2012). Basically, the RBV focuses more on the strengths and the weaknesses of the company and try to use the internal resources to ensure superior performance against its competitors. Barney (1991) emphasized three type of internal resources which is the physical, human and organizational capital resources. In today’s globalization, the economy is dynamic and constantly emerging. Madhani (2009) argues that RBV focuses on different types of resources and competencies to attain strategic importance and constantly changing and updating these elements over a period of time to keep competing in the dynamic market place. Managers of the firm need to keep track of the market place and make full use of the existing internal resources to maintain a sustaining competitive advantage. Over time, organizations need to establish a process which allows them to manipulate their services, products, routines and management in parallel with the market...
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...Introduction According to Mentis (2013, p. 3), Tesco’s core value is to generate for its customers and earn their life loyalty through monitoring the main performance indicators. Today, Tesco’s strategic strength emanates from its hybrid position on the strategic outlook. The company offers a wide range of branded and own brand products in clean, modern and efficient supermarkets with ample parking and facilities for children and yet appears to offer lower prices (Angwin, Cummings and Smith, 2011, p. 3). The company underpins the low prices with low costs which it enjoys from its buying power. According to the resource-based approach, an organization’s competitive advantage comes from the unique capabilities of its resources which not only define, but also generate an organization’s strategic capacity (Jones & Tilley 2007, p. 124). Resource based theorists like Grant argue that management strategies purporting to maximize opportunities are constrained by imperfections of the market and the fact that not all resources necessary for securing competitive advantage can be found and bought in the markets. Consequently, a firm’s competitive advantage lies in what is unique and embedded in its resources in terms of its core distinctive capabilities (Jones & Tilley 2007, p. 124). Therefore, distinct capabilities inform, mold, shape and generate an organization’s strategic capacity. Ideally, the current Tesco’s key indicators reflect on the company’s responsible behavior in...
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...Evaluation of Strategy Tripod In this perspective paper, Peng, Wang & Jiang (2008) state that the success of a MNE is based, especially in emerging markets, on a strategic tripod, whose three legs are the industry-based view, the resource-based view and the institution-based view. According the paper, the institution-based view complement the other two more traditional views and represent a critical element in the definition of the firms’ international business strategy. Basically, MNE’s strategic choices are not only driven by industry conditions and firm capabilities, but are also a reflection of the formal and informal constraints of a particular institutional framework that managers confront (Peng, Wang & Jiang, 2008). The institutional-based view focuses on nation’s political, regulatory and social aspects and their impact on the business environment MNEs interact with. These aspects significantly shape the strategy and performance of the firms – both domestic and foreign – in developing countries, where typically the rules of the game are changing or not completely known (Peng, Wang & Jiang, 2008) To support the strategy tripod framework, the authors outline four different cases, grounded in the context of emerging economies: antidumping as entry barriers, competing in and out of India, growing the firm in China, and governing the corporation in emerging economies. Regarding antidumping as entry barriers, the example discussed is related to a steel producer who enters...
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...Formal Institutions: Politics, Laws, and Economics Wade C. Roberts, Ph.D. Education: Economics Doctorate, University of Utah Expert Fields: Development, Labor, Public, Health, Gender, Forensic Economics Current Research: Microfinance, Poverty & Socioeconomics in Cambodia “The Success and failure of firms around the globe are determined by firms’ ability to understand and take advantage of the different rules of the game”. Understanding Institutions… • What is an institution? • “The humanly devised constraints that structure human interaction” • Douglass North (Nobel Laureate) Understanding Institutions… • Institutional Framework • Formal and informal institutions governing individual/firm behavior. • Supported by three pillars: • Regulatory • Normative • Cognitive Understanding Institutions… • Regulatory Pillar (formal) • Coercive power of governments • Laws, regulations, rules • Normative Pillar (informal) • The values, beliefs and actions of a group (emotions) • Cognitive Pillar (informal) • Internalized values and beliefs that guide behavior • Culture & Ethics (logic) • How do these pillars shape behavior? Understanding Institutions… • What is the KEY ROLE of an institution? • Reduce Uncertainty! • Institutions constrain the range of acceptable actions. • Uncertainty surrounding economic transactions can lead to transaction costs. • Misunderstandings and conflicts. Understanding Institutions… •...
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...Introduction The public’s awareness of sustainability promoted the emergency and growth of renewable energy power (e.g. solar PV generated power). Traditionally, SolarWorld US is the dominant player in solar industry in America. However, with the entry of Chinese companies, SolarWorld’s market share has been reduced to a great extent, leading a financial difficulty recently. SolarWorld US needs a strategic change to survive. Based on the SolarWorld USA case study, this report will briefly analyze the solar power industry in three perspectives, namely, industry-based view, resource-based view, and institution-based view to figure out the competitive advantages and disadvantages by comparing to its competitors. Accordingly, strategic actions will be put forward for SolarWorld USA, as well as for Chinese company for their survivals in US market. Industry-Based View Under industry-based view, the strategies taken by MNEs are based on the conditions within the industry the company focus on (Peng 2013). Porter’s ‘Five Forces’ framework outlines the competitive forces within an industry. Respectively, the five forces are rivalry among competitors, threat of potential entry, bargaining power of suppliers, bargaining power of buyers, and threat of substitutes (Porter 1980). On demand side, the government policy initiatives (i.e. federal tax credit) and direct injection of capital drive the growth of the industry, for both commercial and residential purposes. Additionally, the consumer’s...
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...Economic Growth is the increase per capita gross domestic product (GDP). There is a distinction between nominal and real economic growth, where the first is the growth rate including inflation, while the second is the nominal rate adjusted for inflation. Moreover economic theorists distinguish short-term economic stabilization and long-term economic growth. The topic of economic growth is mainly related to the long run. Short-run variation of economic growth is termed the business cycle. The long-run path of economic growth is one of the central questions of economics. In 1377, the Arabian economic thinker Ibn Khaldun provided one of the earliest descriptions of economic growth in his Muqaddimah (known as Prolegomena in the Western world) (cited in Weiss, 1995): When civilization [population] increases, the available labor again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labor that served the necessity of life. Economic growth is an important part of economic theory and one of the most significant problems economists tried to explain is the differences of growth...
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...Q-3 to present your views on the goals of IBF and its responsibility (if any) to a ‘bigger agenda’; between being part of a movement as opposed to being an ‘industry’ Initial or Ideal Goals and Objectives of IBF Based On Chapra Concept and It Is Benefits The idea of Islamic banking was initiated and brought up by some economists who were conscious about socio economic development of Muslim nations based on Islamic principles. It was based on noble vision and objective of Islamic banking base on profit and loses sharing principle. The foundation of Islamic banking theory that they proposed was based on mudaraba and musharakah contracts as mechanism to operate Islamic banking system. “The early contributions on the theory of Islamic banking were only discussed as part of the subject in Islamic economic system. For example, the book by Qureshi on Islam and the Theory of Interest (Qureshi (l946)) which looked upon banking as a social service that should be sponsored by the government like other public institutions such as public health and education.2 His view was based on the point that the bank could neither pay any interest to account holders nor charge any interest on loans advanced. He also suggests the possibility for both Islamic banks and entrepreneur to create a partnership. No mention was made of profit-sharing.” Other economists were come up with different ideas at earlier stages such “the principle of mudarabah...
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...To what extent do traditional conservatives and the New Right differ in their views on society? Traditional conservatives adopt an organic view of society. This implies that society works like a living thing, an organism, which is sustained by a fragile set of relationships between and amongst its parts. The whole is therefore more than just its individual parts. This implies that the individual cannot be separated from society, but is part of the social groups that nurture him or her, reflecting the dependent and security-seeking tendencies within human nature. Organic societies are fashioned ultimately by natural necessity, and therefore cannot be ‘improved’ by reform or revolution. Indeed, reform or revolution is likely to destroy the delicate fabric of society, creating the possibility of radical social breakdown. Conservative has held that society has an ‘organic’ character, in the sense that it exhibits features that are normally associated with living organisms – human beings or plants. In this view, societies are complex networks of relationships that ultimately exist to maintain the whole, the whole being more important than its individual parts. In that sense, society differs from a machine, which is merely a collection of parts. The conservative notion of an organic society has a variety of implications, including the following: It implies that change, particularly radical change, is undesirable, as it misguidedly treats society as if it were a machine whose parts...
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...Societal Views Both of the sociological perspectives help view society, each one has many similarities and differences. These two theories are the functionalist theory, and the conflict theory. The functionalist theory is an organized society with people that hold the same basic values and morals. The conflict theory is a concept that social is controlled and manipulated by powerful groups. Ultimate control of everything is based on money, wealth, and economic societal power. The two take very different approaches to understanding what society is like. The functionalist theory was created by Robert Merton and Emilie Durkheim. The perspective views society as a combination of institutions, functions that create societal equality, stability and harmony. This means all the functions rely on each other; if one function changes, then so will all the others. This theory is based on natural science itself that’s positivism. This means if there are many problems they blame parts of society. The conflict theory was a perspective that emphasized inequality. Karl Marx was popular for developing this theory. He wanted capitalists to use their power by harbouring resources, and manipulate institutions like religion. Furthermore, thus alienates all the workers. This theory is limited to individuals and cannot observe wider societal situations. Conflict theory is highly undeveloped. If any problems arise this theory blames the entire system. Both functionalism and conflict theory has...
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...HIGHER EDUCATION SOUTH AFRICA (HESA): INPUT FOR THE REVIEW OF THE NATIONAL STUDENT FINANCIAL AID SCHEME (NSFAS) August 2009 _________________________________________________________________ 1. INTRODUCTION The Minister of Higher Education and Training recently announced a review of the National Student Financial Aid Scheme (Government Gazette, 32917 of 10 June 2009). This memorandum represents the collective views of public universities in South Africa, as represented in HESA, on the issues highlighted in the terms of reference of the Review Committee. In addition it addresses a number of related matters which would contribute towards alleviating the plight of students in relation to the cost of higher education. 2. BACKGROUND 2.1 The background to the review of NSFAS is given briefly in the above mentioned Government Gazette and mainly revolves around the inability of NSFAS to meet increasing demands for student financial aid despite increased annual Government allocations to NSFAS and increasing amounts of recovered student loans. 2.2 In the above mentioned Government Gazette the progressive growth in services rendered by NSFAS to include the administration of: Financial aid schemes run by individual universities; special purpose national and provincial government funds such as teacher education bursaries; the management of private sector and donor funds in terms of specified criteria; and of financial aid for students in FET colleges, is set out. In this...
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...Sociology Homework; Assess the strengths and weaknesses of the functionalist view of society. Functionalism is seen as a macro scale approach to society as it doesn’t focus on individual aspects of it but looks at it as a whole. They associate society with a biological organism and Parsons identifies 3 similarities between these two. The first is the system organisms, both society and biological organisms are self-regulating but have parts which are all inter-related to help function as a whole (in the body; cells & organs, in society; institutions). The second similarity is headed system needs, and the last is functions as for example in the body each organ contributes to something different and within society each institution is present for a different purpose. This macro scale approach can be seen as a strength as it allows all sociologist from the functionalist perspective to observe society and the institutions within as a whole. The functionalists also see society as something positive and something that benefits everyone as they believe it focuses on the needs of the whole. An aspect of the functionalist theory is that they believe society is based on value consensus whereby all norms and values are agreed on by members of the society. The functionalists believe that many societies have in placed democracy as the norms and values have come to a state where everyone agrees with them. This can be seen as a strength as the Functionalists are seen to realise that democracy...
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...P1: explain the principal sociological perspectives. In sociology there are six main principal perspectives and these are Functionalism, Marxism, Feminism, Interactionism, Postmodernism, Collectivism and New Right. Functionalism In 1951, Talcott Parsons introduced the Functionalist view and this studies the social structure as a whole of how it functions as well as how each social structure is crucial in the interests of society. Functionalism believes that humans and the society have basic needs, institutions and governments might be responsible to meet the required needs of people also the functionalist may consider that they are different kinds of sources that could limit the individual’s behaviour within the chosen society, meaning that the society will behave appropriately based on one’s behaviour while having the same values, on the other hand the functionalist view does recognise that there may be errors or inequalities within the society but bearing in mind this can be functional for the society. However there have been criticisms against functionalism as some may believe that it is not a realistic way of living and not considering one’s own choices also functionalism may seem to ignore conflict and diversity within individuals in the society. Parsons sees inequalities as a well function to society as it helps in the running of society or community. The main key idea of functionalism is to ensure smooth running of the society and this is done through the structures...
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...Item 2B Marxists see all social institutions as serving the interests of capitalism. They argue that institutions such as the family help maintain the system of class inequality and exploitation. One way in which the family does this is by socialising children into accepting hierarchy. The family is also an important market for consumer goods. Alternatively the functionalists argue that the family performs vital functions for society. For example, it benefits family members by offering mutual support and emotional satisfaction. Using the material from Item 2B and elsewhere assess the Marxist view that the main role of the family is to serve the interests of capitalism. (24 Marks) Each group in society has a different idea on what the main role of the family is. Marxists do not believe that society is based on value consensus, and rejects the view that it operates for the benefit of all. Instead, they see a basic conflict of interest between a small powerful ruling class and the mass of the population, the subject class. They therefore believe that the family is one of a number of institutions which serves to maintain the position of the ruling class. Similarly to Item 2B, “they argue that institutions such as the family help maintain the system of class inequality and exploitation”. For example, both Functionalists and Marxists see the family as a unit which reproduces and socialises children. However, Marxists also see the family as a means for reproducing ‘labour power’...
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