Firm Resources and Sustained Competitive Advantage by Barney - Article Example

FIRM RESOURCES AND SUSTAINED COMPETITIVE ADVANTAGE Student’s Name Course Professor’s Name University Date Purpose of the Article In this article, Barney (1991, p. 99-20) seeks to analyse the relationship between a sustained competitive advantage and the resources of any particular firm comprehensively. Besides, he discusses the four critical indicators of the potential of particular corporation resources to produce an incessant competitive edge over the other companies. The signs in question include rareness, substitutability, value and imitability. The author applies such a model by examining the capability of a blizzard of resources of a firm used in the generation of a stable competitive edge. Additionally, the article sums up by evaluating the possible impacts of the company resource framework of lasting competitive advantage for the other firms in other business areas. Apparently, a theoretical grasp of the agents of sustained competitive advantage for organizations has gained popularity from researchers seeking to explore the subject as part of strategic management (Barney, 1991, p. 99-20). For clarity and conciseness, the article aims to accomplish its purpose by providing a definition of the fundamental concepts that a reader will encounter in various parts of the report. Firm’s resources, for instance, connotes all the assets, attributes, capabilities and processes of the organization among other similar elements. The company is responsible for the control of all these resources as they help it accomplish its goals through the set strategies (Penrose 2011). On the same note, a corporation is deemed to have a competitive advantage when it can create and implement effective strategies that are unique to the particular company (Irina, 2014, p. 1-21). A sustained competitive advantage, therefore, refers to that unique competitive edge that other firms can neither duplicate nor copy at present or in the future according to Chandler (2012). The definitions not only focus on an existing competitor, but also a potential business rival. In essence, the ability of the firm to maintain their competitive advantage depends on the complexity and uniqueness of the advantage as well as the innovativeness. Grant (2011, p. 114–135) notes that a company cannot employ one similar trick forever just because they deem it unique. At one point, the rivals may learn the secrets and unseat the company from its competitive advantage. From these concepts and others that may pop up in the course of the discussion, the author aims to achieve the above purposes of the article successfully. The contribution of the Article to the Subject Area One significant role of this article is to bridge the existing gap between the past research works in this subject area. Most of the research articles written in this subject area have laid much emphasis on independent treatment of a firm’s threats and opportunities. Most of them have also focused on outlining the strengths and weaknesses of a firm besides examining how the aspects are aligned to inform the choice of strategies. Even though the SWOT analysis of a business has been central to most of the recent discussions, this article delineates by focusing mainly on evaluating a firm’s threats and opportunities within the competitive environment. Additionally, the study attempts to explicate the business surrounding factors that are crucial to an excellent and efficient performance of a firm. Essentially, the article adds that in highly performing industries, the threats tend to be less than the opportunities (Porter 2010). On the same breath, the article has reinforced the previous articles’ attempts to focus on the extensive evaluation of the implications of a firm’s business surrounding to its competitive edge. As such, the author has strategically set the research to focus less on the effects of distinctive company features on its competitive advantage. The work, therefore, has applied two assumptions to assist with easy internalization and comprehension of the situation. First, the article postulates that like firms- those within and industry- share similarity concerning the strategically relevant resources they have and the goals they pursue. Secondly, it also hypothesizes the environmental frameworks assumes that any new resource heterogeneity into an industry will be short-lived and may not have any profound impacts on the sustained competitive advantage of a particular company. Such a scenario is projected to arise from the fact that most firms use highly mobile resources to implement their strategies efficiently (Pisano & Shuen, 2013, p. 509–533). Perhaps, the greatest contribution of the article spans from the proof that the two postulations can give one a clear internalization of the effects of the environment on the firm’s performance. However, for improved accuracy, the article applies the resource-based approach to the competitive advantage that cannot be used to explicate these assumptions explicitly. Additionally, despite being a central point of argument for the other similar articles on this subject area, heterogeneity of firm resources are not the possible agents of competitive advantage according to the assumptions Armstrong (2012, p. 197-211). Therefore, the major contribution of the article is the successful application of the resource-based framework to replace the two assumptions in the analysis of the sources of a competitive edge for a company. The Findings and Conclusions of the Article The report has established that the resource-based view of sustained competitive advantage presents a variety of impacts for the link existing between the theory of strategic management and the other areas of business. One of the implications features in the element of sustained competitive advantage and the social welfare. Such a model as the resource based model has addressed the most pivotal issues linking social welfare with strategic management. On this, the author has found out that the initial intent of the structure-conduct-performance model in company economics was to iron out the violations of the competitive model. Besides, it was meant to take care of the previously existing violations and re-establish the benefits of the social welfare which is characteristic of perfectly competitive industries (Grant, 2011, p. 114–135). Strategic management, to some extent, abandoned social welfare issues to establish imperfectly competitive industries so as to favour the gaining of competitiveness by a particular company within that period. At the very least, such an approach to strategic evaluation does away with any social welfare concern. Conversely, it emphasizes on the practices that a firm can adopt to reduce the social welfare. However, in using the resource-based model, the author concludes that indeed such a type of research expeditions can be consistent with the earlier concerns of social welfare by the economists. The article also discussed the organization theory and behaviour and sustained competitive advantage. Other authors have recently concluded that economic, organizational models contradicted the theoretical frameworks of organizations concerning the theory and behaviour of organizations (Barney, 1991, p. 99-20). However, as the author discovers, such a conclusion is controversial and contradicts the stipulations of the resource-based model. Perhaps the most significant finding of this article is the fact that companies cannot wait to take advantage of the open markets and buy a sustained competitive advantage in such a situation. Instead, the firms must find sustained competitive advantage in the non-substitutable and rare resource already under their control. Critical Appraisal of the Article The first finding of the article is that the resource-based framework may show elements of consistency with the existing economic social welfare concerns. Now, from the assumptions that the resources of a firm are immobile and heterogeneous, it is justifiable to say that any company focusing on the advantages of its resources is just being practical and efficient. On the other hand, failure to exploit such resources portrays the firm as unable to maximize the social welfare. It, therefore, follows that the efficient performance of a firm result from the capability of the firm to successfully exploit the advantages accrued from the resources. The author has, therefore, shown that a company’s efforts to creating an imperfectly competitive business environment that minimizes social welfare are not an important factor. In connection, the profits can be regarded as ‘efficiency rents’ rather than ‘monopoly rents.’ To this end, it is justifiable that the article has made a great stride in debunking one of the myths that other articles on the similar subject created. Additionally, the article proves the straightforwardness of the resource-based approach in comparison to the previous contradictory model. The resource-based model, indeed, harbingers a unique integration of the economic and organizational as a means of studying understanding sustained competitive advantage. Finally, the current framework focuses on the criticality of the firm endowments in the creation of sustainable competitive advantages. One vital and obvious assumption of the model is that the business leaders have limited capability to manipulate all the features of their firms. As such, some resources of a firm are can never be imitated and, therefore, can be used to achieve sustainable competitive advantage as the article concludes. Essentially, the article places the managers at the centre of any company’s efforts to obtain and sustain their competitive advantages. While managers may not have the last say in all the aspects of the enterprise, they are still significant players in accomplishing the goals of a company (Scherer 2014). Managers, as Porter (2010) notes, are the only players that can entirely describe the effectiveness of all the endowments of the firm. Without factoring in the role of the managers in the achievement of sustainable competitive advantage, such a success is unlikely. As such, the article is justified to claim that a team of managers is a firm's resource required for the attainment of sustainable competitive advantage. The article, therefore, unlike its peers, has successfully achieved its purposes and presented the substantial proof to back up each claim made herein. References List Armstrong, JS. 2012., ‘The value of formal planning for strategic decision: review of empirical research, Strategic Management Journal, 3, 197-211. Barney, J. 1991. ‘Firm Resources and Sustained Competitive Advantage,' Journal of Management, 17 (1): 99-20 Chandler, A.D. 2012. Strategy and Structure. The MIT Press, Cambridge. Grant, RM. 2011. ‘The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation, California Management Review 33, (3), 114–135. Hofer, C. 2010. Strategy Formulation: Analytical Concepts, West, St. Paul, MN. Irina, K. 2014. ‘Resource-based theory in Marketing,' Journal of the Academy of Marketing Science, 42, 1-21. Penrose, ET. 2011., The Theory of the Growth of the Firm, John Wiley, New York. Pisano, G. & Shuen, A. 2013. "Dynamic Capabilities and Strategic Management". Strategic Management Journal, 18(7), 509–533. Porter, ME. 2010., Competitive Strategy: Techniques for Analysing Industries and Competitors, Free Press, New York. Scherer, EM. 2014. Industrial Market Structure and Economic Performance, Houghton-Mifflin, Boston. Read More