Resource-based view and positioning approach

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Resource-based view (RBV) and positioning are the most popular approaches to strategy formation (Hooley et al, 2000). Their differences and peculiarities create a considerable ground to promote competitions and competitive advantages between organizations.

The adoption of these models influences the organizational structure of the company, so it becomes important to discuss why different organizations like Coca-Cola or Apple give preferences to one of these methods. Overall, it is possible to argue that RBV and positioning are not mutually exclusive; they can be adopted simultaneously.

Resource-based view of the strategy is grounded on the idea that competitive advantage can be acquired through the best utilization of the company`s assets or resources. The term resource is generic and can include such components as in-house of knowledge of technology, skilled workforce, brand name, and unique technological processes (Wernerfelt, 1984, p 172; Mosakowski, 1998).

Such tactics has already proved its reliability, especially in automobile industry. Toyota and other Japanese corporations view RBV as the key principle for each business process. It should be noted that resource-based view of the strategy comprises such models as TQM and Six Sigma for improving the performance.

Michael Porter maintains the firm can obtain long-term supremacy over its rivals by positioning itself as unique or distinguishable from other firms operating in the given market (Porter, 1996, p 61). This goal is attained by serving few needs of many customers as it is done by the producers of auto lubricants; by addressing the broad demands of a very limited audience, usually well-to-do clients; and by serving broad needs of a wide audience^[1] (Porter, 1996, p 62).

RBV and positioning are quite compatible with one another. They are successfully applied by various companies like Hewlett-Packard and Microsoft. Resource-based view is beneficial to that extent that it enables to minimize the operational costs, establish the most optimal workplace standards, and improve time-efficiency (Barney, 1991).

One of the key points of this theory is a proper identification of key resources and effectiveness of the chosen resources. For example, Microsoft’s important key resources are process guidance and threat modeling tool. Process guidance is a part that promotes secure and worthwhile computing system, and threat-modeling tool makes the work of soft developers safer and allows to identify threats earlier than they may appear.

These sources are represented by each part of the team individually, and this very step promotes the creation of competitive parties and advantages. The combination, offered by Microsoft employers, remains to be the key that establishes ongoing competitive example and develops average performance within the sphere of the chosen industry.

Those companies, which attach importance to positioning, usually pay special attention to the so-called value chain. Their main objective is to prove that their product or products are unique in terms of their functionality, reliability, design, and so forth (Hooley et al, 1998; Barry 2000).

They normally adopt the so-called value-based pricing, which usually exceeds the cost of production. One of the examples is Coca-Cola and constant competitions in soft drink industry. The choice of Coca-Cola for environmental condition for positioning is obvious.

This company always struggles for recognition among its customers and talking leading positions among the organizations of the same sphere. Fear of retaliation and the issues of loyalty become the main points to consider. During a long period of time, Coca-Cola tried to achieved the best results and attract the attention of many people. Now, this work is noticeable because such environmental conditions and such forces like the threat to face this competitor make this company recognizable among the others.

The 5 Forces Porter’s Model helps to recognize the attractiveness of the Coca-Cola Company and the development of competitive strategies. The main 5 forces are Suppliers, Buyers, New Entrants, Industrial Competitors, and Substitutes. Each force has its considerable effect on the Coca-Cola development and its competitive abilities.

Let us evaluate each point separately. Competitors of the Coca-Cola Company are Pepsi and other local brands that try to take the same positions in the market share and compete in prices. A threat of entry is closely connected to new and attractive manufacturers, however, these manufacturers are still afraid of Coca-Cola’s popularity, readiness to competitions, and strong popular name.

And such substitutes like milk drinks, coffee, water, beer, and other fashionable drinks promote changes with price-performance. Supply power plays an important role in the Coca-Cola because they are responsible for availability of all the necessary ingredients, quality, safety, and speed of supply chain.

If this chain is broken, the company faces other problems, which influence the other force, the buyer’s own. Power of shops, supermarkets, and numerous bars is noticeable, and these organizations want to use the production of companies, whose goods and services are known around the world. This is why buyer’s power positively influences the development of the Coca-Cola Inc.

The resource-based view of strategy strives for innovation, and the enterprises that chosen this very strategy try to differentiate their business models or technologies rather than products (Prahalad & Hamel, 1990). The main intention is to minimize the cost of production.

They prefer to outsource some of their businesses processes to other countries with less expensive labor force (Held & McGrew, 2000). Both of these approaches have their own strengths and weaknesses. As it has been mentioned before, RBV helps to maximize performance, increase the volume of production and reduce wastes. Yet, it can be imitated, so the competitive advantage may be lost.

In contrast, positioning contributes to better relations with the customers but the firm and the styles itself as different or unique are vulnerable to external forces like the emergence of substitute products (Porter, 1980). This is why it might be prudent to reconcile RVB and positioning. The experience of many corporations indicates that this task is not insurmountable.

References

Barney, J. 1991. “Firm Resources and Sustained Competitive Advantage”. Journal of Management 17, no. 1, (March 1): 99.

Barry. 2000. Organization and management: a critical text. New York: Cengage Learning EMEA.

Held, D. and McGrew, A. 2000, The Globalization Transformations Reader. Cambridge Policy Press.

Hooley. G. Saunders J & Piercy N. 2000 Marketing strategy and competitive positioning. Pearson Education.

Mosakowski, E. (1998) “Managerial Prescriptions under the Resource-Based View of Strategy: The Example of Motivational Techniques”, Strategic Management Journal, 19(12), pp. 1169-1182.

Prahalad, C. and G. Hamel (1990). “The core competence of the organization.” Harvard business review 68(3): 79-91.

Porter, M. 1980. Competitive strategy: techniques for analyzing industries and competitors. New York: Free Press.

Porter M, 1996. “What is Strategy”. Harvard Business Review , pp 61-78. Web.

Wernerfelt B. 1984 “A Resource-based View of the Firm”. Strategic .Management Journal, Vol.5, 171-180.

Footnotes

¹ The most eloquent example of such positioning is Google Inc.

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Resource-based view and positioning approach

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