The Resource-based view of
Competitive Advantage
Paul C. Godfrey
Mark H. Hansen
Marriott School of Management
Brigham Young University
What are resources?
• The building blocks of valuable activities
• Assets, attributes, capabilities, and skills
• A Balance Sheet Asset
• Supports/ facilitates
differentiation
• Skill in broadening and
preserving
• $23.7 BB Brand Equity (2008)
• A Balance Sheet Asset
• Supports/ facilitates
differentiation
• Disney’s capability has
broadened reach, deepened
value
• $7.5 BB Brand Equity (2007)
What makes a resource?
• Value
– Influences a firm’s demand curve (differentiation--Apple)
– Alters a firm’s supply (cost) curve (Wal*Mart)
• Rare
– Few competitors have it (McDonalds locations)
• Difficult to imitate
– Isolates supply advantages
– Competitors can’t copy (Coke’s int’l distribution)
• Difficult to substitute for
– Preserves demand
– Customers can’t find equal value (United Airlines)
• Appropriability
– Resource and profit ownership (NFL teams and players)
Barriers to imitation
• Historical advantages (Coke)
• Path dependent development (Boeing)
• Complex systems (Pharmaceuticals)
• Tacit knowledge (Apple)
• Property rights (Oil Exploration)
Barriers to substitution
• Unique product technical attributes (Oracle databases)
• Positive externalities (Microsoft Office)
• Creating a unique experience (Major League Sports)
• Best when built on inimitable inputs (Disneyland)
Finding resources in the value chain
Firm
Infrastructure
Culture of decentralization, trust (Nordstroms)
Human
Resource
Management
Increased productivity, loyalty, low turnover (Costco)
Support
(Enabling) Technology
Activities Development
Clearly understand costs/markets (Amazon.com)
Procurement
Reduce costs—JIT, improve quality, innovation (Toyota)
Operations
Outbound
Logistics
a
r
g
i
Quality systems (GE)
Distribution (Wal*Mart)
Inbound
Logistics
M
Brand equity (Apple)
Customer Service
(American Express)
Marketing
& Sales
n
After-Sales
Service
Primary (Core)
Activities
Source: Michael Porter, Competitive Advantage, 1985
The resource-base of Me, Inc.
• Knowledge, skill, and personal capabilities are your
greatest assets
– They are portable
– They can be enhanced by personal effort
• Knowledge and skill are highly depreciable
– The cutting edge of knowledge is about 6 months
• You need to be a lifelong learner
Lifelong learning
• Learning comes in many forms
– Cognitive—reading, courses
– Experience—activities, projects
– Revelation—study, prayer, meditation
• Read for business and for pleasure
• Employer sponsored education is a must
• Personal reflection and PAR’s—what have I learned
lately