Resource based view of strategies - Essay Example

Resource based view of strategies INTRODUCTION The paper below explains more on how Resource based view of strategies works. It explains more on how a company can reach its competitive advantage, by its use. Competitive advantage is the ability of a company to produce unique goods by using specific strategies. The paper below also analyses on how a Resource based view can be used by a company to plan for its strategies and analyze the organization as a whole. Resource based views have been used by many successful companies, in that, they analyze their resources, both the internal and external ones and then get into a consensus on what strategy to make. They face a lot of profits in the long run. Resource based view has both advantages and disadvantages. Some people despise it by saying that it does not put into consideration the importance of worker’s input in the work; it also has little focus on capabilities and prescriptive implications. Some other organizations claim that Resource based view is just a theory and cannot be put under practice. But most important, it is not good to criticize a theory; people should look at the organizations which used it and have become successful. Though it may take some time, it is the best way to uplift unsuccessful organizations. Despite the many criticisms organizations still prefer to use it to make their strategies. This essay discusses more about the Nokia Company and on how it should apply the Resource based view in making its future strategies, since competition among the mobile companies is very high. Mobile making companies should be very careful to keep their market positions and avoid losing their customers. Resource-Based View of Strategy: Nokia Mobile Company A Resource-Based View is a management device that is used by an organization, to assess its strategies by effectively and efficiently applying its useful, tangible or intangible resources to determine its competitive advantage. It is also used to transform its short term competitive ability to its sustainability (Clark & Barney, 2007, p.26). Competitive advantage is the implementation of a specific current strategy that is not being implemented by other organizations at the moment and will facilitate to more market opportunities, competitive threats will be neutralized, value creation and the profits will be improved (Clark & Barney, 2007, p.60). This essay aims to use a resource based view of strategies to Nokia Mobile Company, in order to define its competitive advantage and competitive survival over other mobile companies. This essay will critically evaluate a resource based view of Nokia strategic management in order to improve its markets and its profits. Nokia Company was founded by Eduard Polón, and it started its mobile productions in 1967. This Organization has been chosen because it has been facing a lot of challenges concerning its smartphone market strategies. Nokia used Symbian rather than android or IOS, then all of a sudden Symbian market share dropped. Android started to gain market, and this caused pressure on Nokia smartphone devices. By the time the company realized, all its market had gone, and other companies like apple, Samsung and Sony, had taken its market because they had ventured to the Android system. So by the time it made its first android phone, it was not marketable. Nokia decided to make a new strategic alliance with Microsoft Corporation, such that it will be producing its software line for windows phones (Michell, 2010). Nokia then made phones which did not support many applications at first, which led to a big drop to their market. Since then, Nokia was overtaken by Apple as the biggest smart phone maker. Most of the countries started to state that Nokia Windows phones were down compared to others. This despised the company and dropped down its market. Nokia started facing financial difficulties by 2011 because of lower markets. In 2013, Nokia decided to partner with the world’s largest cellular operator, China Mobile. This has posed a greater danger to the company because it will share its profits with china mobile. Despite the collaboration, Nokia faced an operating loss. Nokia brand then recorded a 10-year agreement, with Microsoft Corporation and Nokia accepted not to produce any mobile devices under the Nokia name. This deal was inevitable because Nokia had started facing a lot of financial constraints. By the end of this deal, Nokia might not be able to start again, and this may lead them to sell their company to the China Mobile. This will be a complete loss to the founders of the company. This essay tries to apply the resources of Nokia, to build a new strategy in order to uplift the company once again and its management too (Michell, 2010). Nokia Company planned strategic partnership with Microsoft to build a new global mobile handset Windows Phone, which would serve as Nokia's primary smartphone platform. It focused investments in the next generation of technologies. A new leadership committee was selected to ensure that this strategy was put under practice. This collaboration between Nokia and Microsoft will only bring advantages to the Microsoft Corporation but not Nokia as a whole. This will only bring differences at long last within the two companies. Then it will end up to hatred then the Nokia Company may collapse. The resource based view recommends that, Nokia should venture into android operating system by using its available monetary resources and human resources because most of the customers prefer these phones. Android provides a ready-made, low-cost and customizable operating system for high-tech devices. It also had a very high market preference by the smart phone customers. Worldwide customers prefer android phones (Niranjan, 2013). This can be applied to Nokia because it has financial constraints and yet this operating system is at lower costs and provides a high quality operating system. Android then gained popularity in 2012 and has very high market preferences. Many mobile companies have invested and installed it. Through its many applications in the play store, most of the customers prefer it than other operating systems. This is because it allows customers to browse and download cheaper applications at their pleasure. The android operating system have a very high battery power saving system because they manage the phone memory (RAM) to keep power consumption at a minimum, compared to other operating systems. IOS operating system is used in many phones and tablets like Ipods and IPhone. The collaboration of the two operating systems in one mobile device will create out the best and superb device in the world. The different mobile operating systems in the world are; Android from Google, Blackberry, IOS from Apple, Windows Phone from Microsoft, Firefox OS from a non-profit organization Mozilla Foundation, Sailfish OS from Jolla, Symbian platform from Nokia for models of their current entry level smartphones and Ubuntu Touch OS from Canonical Ltd. Smartphone companies tries to outdo each other in terms of storage, processor speed and camera megapixels. Android operating system has high qualities for these properties (Michell, 2010). The popularity of an operating system matters because this creates market opportunities to a new device. For instance, the Apple iPhone quickly stole market share from BlackBerry, but now it is below the Google Android in terms of the number of devices sold. So the use of Android to produce one operating system for the new devices can provoke a high market desire. It will not have any competition. All the other companies will wonder where the Nokia phone got its device but it’s through the knowledge of workers also the culture within the firm. This has helped them get back to their previous market and has been able to make more profit (Khosrowpour, 2006). Some customers may possess some different brand of smart phones and may prefer to stick to them, but with the introduction of a high quality handset with mobile OS update, the competition gets stiffer. So if Nokia comes up with a device with high Android operating system, most of the customers will rush to it. Nokia should anticipate at producing smart phones with the latest Android versions so that customers will rush to buy their devices. This is because it will be of high quality and that they will not feel humiliated. They should also sell their smartphones at a lower price compared to the other company’s smartphones of the same quality because this will attract a lot of customers. Some of the other strategic management approaches reviving the Nokia Company is by not reviving its contract with the China Mobile. This is because the china mobile will continue benefiting from the benefits of the company and will eventually take away the company. The agreement of the Nokia company not to produce mobile phones under the Nokia phone within this ten year period, the have faced a lot of losses. Another strategy is for the company to borrow money from banks which they will pay with time being (Niranjan, 2013). This will revive them in their financial problems, and they will be able to produce new devices, which will repay their debtors. Resource based view applies all the resources available in the company and outside. They should also be ready to involve other stakeholders in their company so that they help with cash. This resource based view of cooperating with the android mobile operating system is the based compared to these others because even if they get cash and do not replace their smart phone operating system, they will not get adequate market to repair back their debts or even to get profits. Adopting a new operating system is the best way to finish its problems and will help it attain its market. This current strategy will facilitate more market opportunities competition will be lowered, and the organization’s profit will increase. The other strategic management approaches will contribute to this current one in a way. This is because; the company should not renew its contract and should be ready to run by its own. Despite the past accomplishments of Nokia, it should start once again from the start. It should not depend on the achievements of China Mobile. Comparing Nokia and other branches of mobile phone production, it will be able to outdo the others and get back to its level as the number one phone production company. This resource based view is very efficient in Nokia Company. The company should start looking for money which will enable them collaborates with the android mobile operating system (Kirsch, 2007). The should also start negotiating with the android system so that when the ten year collaboration with China Mobile ends, they will be able to start their company without any problem. It is good to understand the previous strategies of Nokia, so that when implementing this current strategy, one will be assured of what to do and how to implement it. Strategic planning is an organization’s process for identifying strategy, direction and making decisions on how to allocate its resources to pursue this strategy. For the organization to determine the future direction, its present is important and then applies courses of action. It deals with what people will do, and how they will excel. Resource-based view is seen as one of the major theories of strategic management, so for a company to achieve its competitive advantage, it is good to apply it. If an organization wants to realize their competitive advantage or maximize their profit from the resources they possess, it has to take into account of the demand-side characteristics that influence on the final price of their output. The values of resources are determined by demand side characteristics, and those are also included in Resource based view (Armstrong 2010). Resource based view also contains a theory of sustainability whereby it is be able to sustain the Organization. This resource based view looks at the resources inside the organization and then comes out with a solution on what should be done to improve the quality of the products. So when the leaders of the organization get together and then analyze their resources, they will come to a consensus that they produce the best quality they can. The management of accompany and its bundle resources determine the resource based view; this is because it describes resources characteristics in terms of its value, its rarity, its inimitability and non-substitutability (Armstrong 2010. p.123). Value analyses the ability of a resource to enable a company to employ a value-creating strategy, by either diminishing its competitors or reducing its disadvantages. Rarity, on the other hand, states that a valuable resource must be rare and unique in terms of availability to other firms. The resource based view suggests that organization’s employees management practices mostly contributes to sustaining competitive advantage by improving knowledge, skills and culture within the firm that are difficult to be copied by other organizations. Therefore, inimitability describes the importance of a resource if competitors are not able to copy this strategic asset perfectly. Some of the unique resources are knowledge of the workers and the social complex of the company. Non-substitutability implies that the ability of a resource not to be copied by another organization it should not be substitutable by the same organization. Considering all these aspects, resource based view is the necessary groundwork for identifying an organization’s key resources, evaluation of these resources and finally, nurturing and protecting the resources because by doing so will improve organizational performance. The resource based view explains that the creation of a barrier by a product such that another organization cannot copy it is the best way to attain competitive advantage (Henry, 2011). Resource based view also assumes that, in a highly competitive market, a company can also gain profits as long as it exploits its advantageous resources like knowledge and capital. Resource based view also implies that companies with valuable assets, perform better. According to resource based view, intra-organizational politics and culture are the important factors to achieve a good strategy. Resource based view also analyses the human resource management and the overall performance of the organization (Cynthia 2005). It also ensures that a company does not perform the way it used to in the olden days and also that it does not copy other organizations. It helps to understand the unique resources existing in the company that can be applied to increase the competitive advantage of the organization. The workers should also be promised of a pay increment if the company gets back to its position. This improves the worker’s motive to work and their passion to the company (Henry, 2011. p. 112). In organizational strategy, resource based view look at the relationship between mission, vision and resources. It allows managers to focus on its long-term plan and determine if it is meeting its mission objectives, when focusing on the work done by employees. Organizational strategy explores the relationship between the unit and the environment. It involves action matching skills and resources with opportunities and threats. Determining the strategies of a certain company, need a lot of care such that they do not end up in the wrong position again. It should look closely at the competitors and drive out a strategy that will conquer all of them. The competitors should not at any chance know how the company is moving forward. There should be an oath to stay mum to the other companies (Henry, 2011. p. 122). Therefore, resource based view contributes to an organizations strategic planning since by looking at all the resources, the management will plan on what to do concerning their problem, then communicate it to all workers. Then they come up with a conclusion on the best activities to do, for them to be successful. In this essay, Nokia’s has human resources in terms of knowledge and labor, lower capital resources, and they have a great organization culture, such that they respect their company at large. When they collaborate with the android mobile operating system, the Nokia professionals will be able to come up with a high-tech device which will win the heart of many people and then they gain their market one more. Resource based view strategies plan is one of the best ways to attain competitive advantage of an organization. It aims to look at the previous strategies of the company and then make new improved ones. By virtue of the company, the managers and the workers participate, so that they make well informed strategies. The workers should be ready to provide their efforts and knowledge in order to improve the well fare of the community. This is achieved through commitment and dedication to the company. They should not betray their company, by sharing what they do in the company with other companies because this will create a breach of their information and duplication of their devices can occur. It will also lead to loss and the profits will drain. Analyzing of a company’s resources is the best way to start for achieving greater profits (Henry, 2011. p. 156). An organizational analysis tool is used when trying to improve an organization’s efficiency. Resource based view looks at the outputs of an organization. A resource based view allows one to analyze an organization since it looks at the internal and external resources of the company and its strengths and weaknesses. Internal and external factors determine where an organization is heading, also their customers. Resource based view, aims at understanding an organization and its different parts and how they are influenced by various factors in order to employ a particular problem-solving ability. Resource based view assesses the organization's systems, capacity of the people, and functionality so that its performance and output is increased. The resource based view aims at understanding behavioral relationships, structure, and technology, within the organization by studying theories. A good knowledge of the problem under analysis is required. Here, a resource based view tries to change on how the human resource works and the labor division. The resource based view analyses the external environment by considering the political, legal, technological, economic influences on the organization and then at the threats and their advantages. Resource based view also analyses the internal environment, that is, internal strengths and weaknesses of the organization and also looks at the available internal resources, structure, leadership, skills, knowledge and culture of the organization (Günter & Ingmar, 2006. P. 67). The resource based view also looks at the previous organization’s strategies. It reviews on its vision statement, mission statement, corporate objectives and values. It does a thorough analysis of the external and internal environment of the organization, to understand the reasoning behind the organization’s strategy. Resource based view also identifies the organization’s key sources of competitive advantage. It looks at its competitors and what is bringing the difference. Then it focuses the key competitive action to attain the best outcome. Resource based view analyses on the management activities, and the network within the organization. Whereby it focuses on the relationships among people and the characteristics of the people. These relationships may involve the way people interact with each other, how they exchange of information, or other such as goods and money. By studying these relationships, resource based view helps to open the communication patterns present in the organization, and then comparison is done with the communication structures. For instance, how employees communicate with each other control the information which they give out (Günter & Ingmar, 2006. p.89). Resource based view also analyses on how competitors can use identical or similar resources like for that company. Avoiding imitation of a company's resources helps to achieve a competitive advantage. In addition to analyzing the organization's environment and its culture, resource based view estimates the organization's strategic situation by taking a good look at its top leaders, its use of teams, its decision making processes, and its use of information technology. Top-level leaders should set the strategic direction of their company within the broad context of the company environment, now increasingly globally. It implies forward vision extending over very long time spans, in some cases out to 50 years or more. Strategic leadership is a process where large scale companies, make long-term directions by listening to each other, building the energetic support of key constituencies necessary for the commitment of resources (Günter & Ingmar, 2006. p.106). Resource based view looks at the financial performance analysis, also look at the financial health of the organization, what losses they have incurred or the profits. This helps the organization because they will know their way forward by calculating on their finances. Resource based view also looks at the Marketing Department which is responsible for identifying, anticipating and satisfying the right customer needs and expectations. The Market share (strength and competitiveness in the market), and size of the loyal customer/corporate account base. It also looks at the customer service/care and customer loyalty programs. It also looks at the Human Resource Department which is responsible for maintaining the right and competent employees and managers for a competitive advantage. Resource based view analyses the value chain and looks at the current and potential customers, the company’s primary and supportive value chain activities creating customer value and how they react when serving their customers. The primary Value Chain Activities-in bound logistics, production/operations, outbound logistics, marketing and sales, after sale service, and also the supportive activities-Company infrastructure, human resource management, that is, how they manage their employees, procurement, value-adding technology (Günter & Ingmar, 2006. p.112). Production and operations are responsible for making the product design or ideas and raw materials into the best finished products to be sold to customers. The products they produce if are of high quality. Organization analysis is very important as it defines the design and structure of the company. A well-organized company will always have good reputations to its customers and the organization members themselves. Resource based view is the best when analyzing and strategizing a company. By doing all these, resource based view is critically analyzing the organization, even if indirectly. So the company officials will be able to understand more about their organization and the way it is operating. They will know what should be added or reduce by the end of the view. This also saves time to the organization because they will not have to do analysis again. They will just look at their weaknesses and try to overcome them at all costs, when this happens the company might not be able to uplift themselves once more (Günter & Ingmar, 2006. p.169). Conclusion In summary, Resource based view should be applied by all companies who want to succeed in the correct ways. This will improve the performance of the human resource and the company at large. The work culture should be cool such that everyone has respect for the other and that decisions made are respected by every person. The company’s success is determined by the internal resources it possesses and its ability to manage them. External resources like financial assistance from other corporations, good reputation of the company also improve the company welfare. A company’s good reputation to its customers is also another important aspect. Nokia should preserve and obey their customers at all times so that everything will be all right when it comes to the market prevalence. References Clark ,N., D., and Barney, B., J., (2007) Resource-Based Theory: Creating and Sustaining Competitive Advantage. New York: Oxford University Press. Michell, T., (2010) Samsung Electronics: And the Struggle For Leadership of the Electronics Industry. New Jersey: John Wiley & Sons, Cynthia A. (2005) Resource-Based and Evolutionary Theories of the Firm: Towards a Synthesis. Montgomery: Springer. Khosrowpour, M., (2006) Emerging Trends and Challenges in Information Technology Management. Hershey: Idea Group Inc (IGI) Niranjan, K., (2013) Nokia: Channels of Distributions. Munchen: GRIN Verlag Kirsch, K., (2007) Critically Review how the Resource-based View Has Developed Our Understanding of Strategy. Denmark: BoD – Books on Demand, Armstrong, M., (2010) Armstrong's Essential Human Resource Management Practice: A Guide to People Management. London: Kogan Page Publishers, Henry, A., (2011) Understanding Strategic Management. New York: Oxford University Press Günter K., & Ingmar B., (2006) Handbook of Research in International Human Resource Management. Northampton: Edward Elgar Publishing Read More