The RBV is a model of company performance which focuses on the resources and capabilities controlled by a company that enable it to improve its efficiency and effectiveness
The RBV is a model of company performance which focuses on the resources and capabilities controlled by a company that enable it to improve its efficiency and effectiveness. In order for a company to convert the resources into sustainable competitive advantage, resources should have four factors which summarized into the VRIO framework. The four factors are valuable, rare, costly to imitate and the company is organized to exploit the resources. I will focus on former three factors to discuss in details.
Resources are valuable if they enable a company implement strategies that improve a company’s efficiency and effectiveness by exploiting opportunities and reducing threats. Take Apple as an example, they provide value to their customers by brand reputation, high quality and innovative features of products (such as Smartwatch). The capabilities of Apple in R;D helped them to developing unique features in their products. It can be turned into a product attribute that customer value.
Resources can be obtained by few or only one company that considered to be rare. A company would enjoy temporary or sustainable competitive advantage if the company process their resources that are valuable and rare. Apple has the capabilities to offer unique iOS system to customer and has capabilities to continuous improvement. Thus, Apple can enjoy competitive advantage due to their valuable and rare resources (technology skill and innovativeness), which make them get higher market share of the industry.
A company has valuable, rare and costly to imitate resources that can enjoy sustainable competitive advantage. It may give the company a first-mover advantage but competitors will try to imitate the resources. Once competitors observe this competitive advantage, they will try to develop comparable and similar products through direct duplication or substitution. At Apple, it is costly to imitate iOS system but the competitors like Samsung offers substitute system (Android system) to the market. But Apple still have capabilities to obtain large market share of the industry.