Discuss the resource-based view of competitive advantage.
What are the characteristics of resources that may yield sustainable competitive
advantage? Describe the role that Information systems can play in creating sustainable
competitive advantage.
Briefly comment on Carr’s ‘It Doesn’t Matter’ argument, offer your thoughts.
Resource based view (RBV) is used to analyze and interpret resources of an
organization to understand how the organization is able to achieve sustainable
competitive advantage in the market (Madhani, 2009). Sustainable competitive
advantage is what most companies strive for, where they experience financial
performance that consistently outperforms their industry peers (Saylor Academy, 2012).
There are several characteristics of resources that may yield sustainable
competitive advantage. These are typically described as the Porter’s five forces which
are also known as “Industry and Competitive Analysis (Saylor Academy, 2012). As
Kroenke (2007) explains these five forces, the five competitive forces determine
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industry profitability. These forces are listed here: bargaining power of customers, threat
of substitutes, bargaining power of suppliers, threat of new entrants, and rivalry among
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existing firms (Kroenke, 2007). The intensity of the forces is what determines the
characteristics of the industry, gives information about profitability as well as the
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sustainability of that profit (Kroenke, 2007). To have competitive advantage in a market,
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companies assess and analyze these five forces and decide how they will respond to
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them (Kroenke, 2007). To respond to the forces, companies can apply one of four
competitive strategies. The company can choose to be a cost leader or a differentiator
and then decide how narrow or broad their focus will be.After choosing a competitive
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strategy, the company must then organize and structure the company’s internal
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organizational structure in a way that sets them up to properly implement the new
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strategy. This is where the value chain model comes into play. The value chain is a
network of value-creating activities that are created to align the company with its new
competitive strategy (Kroenke, 2007). Value chains can appear to be the same for
companies, however, the way that they are implemented can be drastically different
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according to their competitive strategies.
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As it pertains to creating sustainable competitive advantage, companies have
various ways to keep and maintain their competitive advantage. Here, we will discuss
the use of online access, technology and information systems in maintaining this
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competitive advantage. Technological advances allow companies to use large
information systems to gather data regarding their customers. Data that might be
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obtained would include demographics, as well as purchase history, and frequency of
using the business for example. Companies can also use information systems to set up
customers with subscription emails and subscription services, such as getting good
delivered every few weeks as requested by the customer. This information is kept in an
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information system database that can keep up with the many demands of multiple
customers ensuring their subscription emails and or goods are delivered on time and
into the right hands. By doing this, businesses increase their competitive advantage,
especially if they are in a market where other businesses are not quite there yet with the
technological advances. Customers essentially get locked into businesses who offer
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services like this, which store their shipping information, name, email, and credit card.
Since it makes it easier on the customer, the customer is more likely to come back to
the company’s website rather than going to the website of a competitor who the
customer has never done business with before.
I was shocked to hear Carr saying that if you are using technology to innovate
your way into having competitive advantage, you are basically a fool. I think that
companies who do not use technology to innovate their competitive advantage would be
ruining their future strategic advantage. As we know, we are surrounded by technology
in every way. There are robots in hospitals able to do surgery, there are cars that can
essentially drive themselves, and we know that there are AI services that can be set up
in our houses that make it possible to live at home without ever touching anything.
Technology is important, as are information systems. In a heavy technology world, it is
essential for all business who wish to maintain competitive advantage and maintain
profitability to continue to adapt to the ever changing technological advances we are
exposed to. We have dug deep into Netflix’s business model, and it is so clear that
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using technology and information systems is what truly gave them their competitive
advantage over their first main competitor, Blockbuster.
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References:
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Kroenke, D. (2007). Organizational Strategy, Information Systems, and Competitive
Advantage. Experiencing MIS. Upper Saddle River, NJ: Prentice Hall.
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Madhani, Pankaj. (2009). Resource Based View (RBV) of Competitive Advantages:
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Importance, Issues and Implications.
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https://www.researchgate.net/publication/45072537_Resource_Based_View_RBV_of_C
ompetitive_Advantages_Importance_Issues_and_Implications
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Saylor Academy. (2012a). Strategy and Technology: Concepts and Frameworks for
Understanding What Separates Winners from Losers. Saylordotorg
https://saylordotorg.github.io/text_information-systems-a-managers-guide-to-
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harnessing-technology-v2.0/s06-strategy-and-technology-concep.html
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