According to definition RBV basically work for resources which have capacity to adding value

for the organization. Now question is what does mean value adding? Value adding means some
being added according to dictionary means but for strategy its means a benefits, profit, or some
outcome. So value adding means if a resources can increasing productivity than we shall
consider the resources will be value adding for the organization. Similarly we can say if the
resources can improve your efficiency and if a resources can product or business can innovation
that set of resources are value adding.
So a machine or resources, equipment or any intellectual property that help an organization to
increase the productivity and increase efficiency or decrease the wastage of time and money as
well as make over all innovative to gives the reputation in the market therefore its gives more
profit than we can say that seat of resources are value adding resources.
According to management there are four type of resources like
1. Physical or capital resources: physical resources are land. Building, machine,
equipment etc.
2. Human resources: HR department that means organization employee profile.
3. Financial resources: this are usually cover financial funds
Intellectual property: information resources are intellectual property that means formula,
design, logo, recipe patent, copy right, model, prototype etc.
Most important thing that RVB model work for 3 resources Physical resources, intellectual
resources and human resources.
Seven elements of resources based view model
If a resources or a set of resources become qualify again those resources seven parameters than
we can claim this are the good resources for further investment.
1. prior or acquired resources: its means full control over the resources by become
buying a business or buying resources you can be owner of the resources than ask your
self do I have full freedom to used that than we can say resources is good resources for
investment. So if you have full control on that resources than value creation is
significance to be success.
2. Innovative capability: whether the resources can make your business? Can make your
process or system? Can make your product innovative or not. If this resources are very
much innovative defiantly we shall invest it for the resources.so if any company gain
more innovative resources that company take competitive advantage than others.
Innovation is very significance for any company because it is provide actual competitive
advantage. For example, IPhone has develop unique feature therefore they hold
competitive advantage.
3. Being truly competitive: if the resources must be relevant for the business and resources
must be truly useful for the business. It can be increase productivity or efficiency that
means if the resources truly competitive than invest it.so it mostly significance to develop
as a being actual strength than competitor. For example, us company Microsoft build
software package for a computer and provide superior to any other therefore they hold
market position.
 4. Substitutability: If the resources are substitute in the market this resources not a good
investment because substitute always threat for the business and you want to increase
your efficiency or others by purchasing resources but your competitive also buy the same
resources and enhance their competitiveness therefore you have no benefit by using that
resources.
5. Appropriability: it means resources must be matching relevant for the organization.
An organization must get true benefited and there is assumption if an organization get
benefits for certain resources.it is assume that all the stakeholder of the company could
enjoy that benefits than you can invest for that resources. For example the Bangladeshi
company Yellow has organized their business such that it owns both manufacturing and
distribution outlet therefore they ensure that it retains the value added which has been
develop throughout its value chain.

6. Durability: the resources must be long-lasting that means resource must be useable for
quit sustainability for longer period otherwise no one shall invest this resources.so if the
resources have longer lifetime it means provide benefits for a longer period of time.

7. Imitability: if the resources easily copy able in that case resources has no unique value.
Yes resources may not close substitute, may not there are no alternate product in the
market but that resources can easily copy it that means if the process can easily copy
your competitor than competition will be increase. But there have three consequences
that gives competitive advantage

a) Tangible uniqueness: the feature is very much expose, very much open or
anybody can be easily copy but that are not at all to hold to position that copy
because it may be design are very much complex, may be in order to copy that
thing but you need huge fund, you have this uniqueness is protect by law through
patent, copy right, registered trade mark for example Bata .no one can copy this
logo, name because its registered.
b) Casual ambiguity: sometime you have same resources and believe that if he/she
can easily copy or imitate than they can easily successes but in reality it will be
differ because it may be knowledge or management or others
c) Investment deterrence: miss match in between expected investment and actual
investment. We know that market are limited but growth prospects unknown. For
small investment face some difficult on other hand a substantial investment may
lead to by making new strategy and well protected to competitor from entire the
market.
For example, car company Toyota. They have developed a good manufacturing process and also
they have unique human resources that are difficult to copy others company.

The VRIO framework

This model try more quantify and try to understand financial benefits. In organization
required many resources but we need to identify the resources that resources gives more
return. Through VRIO model we can identify those resources. Professor Jay Barney
suggested this model. VRIO stand for valuable. Rare, cannot be imitate, organizing
capability.
Is a resources
Valuable? Rare? Costly Capable of Competitive Comparative
to being exploit implication economic to
imitate? by the be expected
organization? from the
resources

No - - No Competitive Below Situation

disadvantage normal 01
Yes No - Yes/No Competitive normal Situation
parity 02
Yes Yes No Yes/No Temporary Above Situation
Competitive normal 03
advantage

Yes Yes Yes Yes Sustainable Above Situation

Competitive normal 04
advantage

Valuable: every organization should know about their resources are valuable or not
because if the resources are valuable that company take unique strategy and hold position
in the market.
Rare: resources should be rare if it is rare than it give to competitive advantage otherwise
competitor take this and increasing the competition in the market.
Cannot be imitated: every organization required to identify resources that are not easy to
imitate their competitor. If the resources cannot easily copy then competitor will not hold
competitive advantage therefore company can generate profit amble to hold market
position.
Organizing capability: organization should be identify their ability because there have
valuable. Rare and inimitable but they can’t exploit it. It just good for nothing it just
waste time and money.

How to find six questions answer

Is the resources or capability Valuable? Resources are valuable or not we looking to
benefits. If the resources gives benefits than we consider that resources have value.
 Is the resources or capability rare: look in the market and observe that here have a
substitute or not. If there have no substitute than answer is yes that resources have rare in
the market.
Is the resources or capability costly to imitate? : First of all call technician than say
that resources gives a costly advantage and can anyone copy easy or not? You should
identify this question.
Is the resources or capability of being exploited by the organization? : should a
company able to use that resources or not? If the company able to use and exploit that
resources than we can say answer will be yes otherwise no.
Is the resources or capability competitive implications: this information we can get
finance and operation department. Is it give any advantage from other competitor? Is that
resources increase productivity?
Is the resources or capability comparative economic performance to be from the
resources? This question answer we find out from finance and operation department as
well as cost department. Basically this question answer take on return on investment
(ROI).
Under the 4 situation who are invest
Situation 01: under this situation no one can invest their investment.
Situation 02: if the company face distress situation than they may invest and if the
company have more free cash flow but don’t have investment opportunity than they may
be invest it.
Situation 03: any one can be copy but this situation investor must be try to ensure that
before copy it you should try to recover it. For this reason they should calculate payback
period and try to collect your investment within payback period.
Situation 04: everyone try to invest this situation because this situation return investment
high.

According to the strategic management an organization need three types of resources and those
are-

i. Tangible Resources
ii. Intangible Resource
iii. Capability.

i. Tangible Resources - The resources which is known as a physical resources which

you can see of an organization
 ii. Intangible Resources – The many other important resources of an organization which
you can’t see but it exist in the organization. It’s not physically present in
organization.
iii. Capability – The capability indicated the organizational capability of an organization
like the skill, strategy, ability, management style of an organization, leadership all
those things etc. a company use those thing all together and use it efficiently.

Importance of the distinctive capability on an organization.

For the competitive advantages a organization have to be strong in their capabilities & “JOHN
KAY” told about the same things in our text book. Good organizational capabilities are able to
bring the opportunity & help to create competitive advantages for an organization. It’s related
with the distinctive capabilities. To build unique resources area in a organization three things are
more important to build a distinctive competitive advantages and those are much more needed
for an organization –

i. Architecture
ii. Reputation
iii. Innovation

i. Architecture – the architecture doesn’t mean the builder who architects the houses. In
the perspective of the organizational architecture means it is nothing but the network
of build the relationship among the internal stakeholders or the external stakeholders.
The stake holders can able to effect on the organization’s objective. So it is very
important for an organization to maintain the good relationship with them. The
internal stakeholders are director, employees & owner and the external stakeholders
are creditors, supplier, specific community, government etc. the organization needs
the architecture capability to survive & sustain in the market. The architecture is also
known as a relationship model. It is all about you like the relationship is mean to be
that –
a. Your communication capability
b. Your relationship maintenance capability
 c. Your networking spreading capability

# - Here, “YOU” is denoted as an organization.

ii. Reputation – we know that a successful company has good reputation and good image in the
market. Therefore we can say that for the competitive advantages a company must have to
reputation in the market. According to the organization perspective, reputation means how a
company managing their image in the market and what kind of image they want to create in
the market for their stakeholder and especially for their customer like goodwill of an
organization. Organization must need to set their reputation if they want to create the
distinctive competitive advantages.
iii. Innovative capabilities – A organization need unique or the differenced things which make the
them differentiated. In terms of the innovative capabilities a organization need few things to
do and those are
a. They should have the capability of product development based on the market,
stakeholders & customer requirement.
b. Upgraded the system, strategically style based on the present market scenario.
c. Need the capability of adapt the innovative business idea.
d. Always work for the new product development for finding the new scope and the
opportunities.

There have few organizations for having those types of capability or talent. Because many
organization don’t invest in research and development but when the organization invest more in
the research and development then there has a higher chance to gain those types of capability. It
helps an organization for creating competitive advantages for an organization. The knowledge is
not only just data, it is more than data. It is experience, ability not just only information. In the
meantime the business is going on based on the customer knowledge that means what is their
desires.

Core Competence
The ability or the feature which is differentiated a organization among the other competitors. An
organization’s ability, capacity, high technology & the most important thing is knowledge that
able an organization to provide a particular benefit for an organization. Few thing are very much
needed if a organization need to be differentiated and those are

i. Skill
ii. Technology
iii. Knowledge

By using the skills, ability, capacity & technology organization needs to give the benefit to their
customer. The added more value for their customer and it helps attract customer to take their
service rather than any others. The knowledge is a treasure for an organization. All those things
are needed to build a core competence for an organization.

 Good core competences have some indication to identify and those are
a. It is adding more value and benefit for the customer by adding new feature or service
and think about the customer benefit.
b. It will be highly differentiated which can’t be copy or omitted.
c. Extendable means develop you competence for today and tomorrow. If you want to
attract new customer you must need to develop the strategy or characteristic for the
future. Core competence develop is not only for surviving in the market but also for
the future too. The extendable only come through the research and development, trail,
training and development. Those things make core competence extendable.

Knowledge management and main sources of Competitive advantages

Accumulation all the skill, knowledge, ability, routine and use it shape the organizational ability
to compete or survive in the market. Those things are using more proper and more efficient way
is known as a knowledge management.

There has two types of knowledge and those are

i. Human Knowledge – It is all about an individual knowledge which individual

gain from the education, trail, research and development, observing, training and
 development & also can gain knowledge through the informal way like (learn
from the reading a story or news).
ii. Organizational Knowledge – we know that the two or more persons come
together for a common purpose in an organization. In the organization collect the
knowledge from the variety resources and those are –
a. Collective human resources – By recruiting a company collect the human as
their resources and use them for the common purpose of an organization
b. Collective human brain and use the knowledge for achieving the common
purpose.
c. Collective behavior – what the market need and are the customer requirement
based on it adapt the new things and follow the behavior
d. Collective capacity- the way organization works together and improves the
efficiency of the better outcome by using their employee and other particular.

The sources help to create organizational knowledge management more efficient

and turn it on a valuable asset for an organization. The “GRAMENPHONE” are
the pioneer of knowledge management in the Bangladesh.