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1
 RESOURCE BASED VIEW OF THE FIRM

Article: A natural – resource - based view of the firm by Stuart L

Hart

Scholars in the area of strategic management have known that competitive advantage relies on

the link between different organizational (internal) abilities and varying environmental (external)

situations (Andrews, 1971; Chandler, 1962; Hofer & Schendel, 1978; Penrose, 1959). Although,

it has only been during the previous years that an authentic theory, called as the resource- based

vision of the company has come up, enunciating the ties amongst the firm abilities, assets and

competitive advantage. Figure below gives a graphical precision of these ties and some of the

essential authors linked with the core perspective.

The idea of competitive advantage has been used widely in the management works. Porter (1980,

1985) carefully enhanced the ideas of cost leadership and differentiation comparative to its rivals

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as two essential resources of competitive advantage: a “low- cost” situations allows a company

to adopt aggressive pricing and increased sales. On the other hand, “differentiated good” builds

brand loyalty and good repute, aiding premium pricing. Decisions relating timing like moving

promptly or late and dedication level like coming on a higher scale or incrementally are

important in acquiring competitive advantage (Ghemawat, 1986; Lieberman & Montgomery,

1988). If a company makes a move promptly or on a higher scale, it is possible to forestall rivals

by creating new principles or obtaining access to important destinations, consumers, resources

and production ability. Hence, this allows companies to attain an emphasis and control a specific

niche, either via reduced costs, varied goods or both (Ghemawat, 1986; Porter, 1980). Lastly,

Hamel and Prahalad (1989. 1994) have focused on the essentiality of competing for the future as

an ignored sector and competitive advantage. As per this, the business must be apprehensive not

only with the current success and development in the medium term, but also with its future

situation and resource of competitive advantage. This concept needs clear planning about how

the company will compete when its plans are counterfeit or made outdated.

The link between the company’s abilities and competitive advantage has been clearly

demonstrated in works. Andrews (1971) then, Hofer and Schendel (1978) and Snow and

Hrebiniak (1980) made the importance of “distinctive competencies” very clear to competitive

prosperity. Currently, Prahalad and Hamel (1990) and Ulrich and Lake (1991) re-focused the

strategic essentiality of recognizing, handling and leveraging “core abilities” instead of

emphasizing only on goods and industries in firm strategizing. The resource-based idea takes this

concept a little ahead: It suggests that competitive advantage can be maintained only if the

abilities creating it are aided by sources that are no copied by rivals. In other words, the

company’s resources must increase “barriers to copying” (Rumelt, 1984). Hence, sources are the

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items of examination and consist financial and physical resources and worker’s capabilities and

social procedures. A business’ abilities come from collection of assets being brought to bear on

specific value-added activities like just-in-time manufacture.

Thought the words differ, it shows a general statement in the management works about the asset

features that add to a company’s maintained competitive advantage. At the basic level, the

sources must be “valuable” means rent producing and have no alternatives (Barney, 1991;

Dierickx & Cool, 1989). This means, for an asset to have long-lasting value it must add to a

company ability that has competitive importance and is not easily obtained via varied ways.

Then, strategically, essential assets must be exceptional and/or particular to a given company

(Barney, 1991; Reed & DeFillippi, 1990). This means they must not be delivered everywhere in

a market and/or must be recognized within a given firm, making them hard to trade or allocate

like high-class supply chain preparation. Though financial and physical assets may manufacture

a temporary benefit for a company, they mostly can be easily obtained in factor markets by rivals

or recent applicants. Contrariwise, a different guide via history may allow a firm to attain

valuable and rare assets that can’t be readily obtained by rivals (Barney, 1991).

Lastly, and most essential, such sources must be problematic to copy as they are either tactic or

socially difficult (Teece, 1987; Winter, 1987). The first are on the basis on people extensive and

capability. Such sources are “hidden” on the basis of learning-by-doing that are gathered by

experience and polished by practice (Itami, 1987; Polanyi, 1962). The latter, rely on groups

involved in combined activity like few humans, if any, have enough knowledge to obtain the

whole idea (Barney, 1991; Reed & DeFillippi 1990).

Implementing this in the framework of resource based concept, which Zara has created, it can be

examined that the major reasons for this are its supply network and capability to gather recent

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goods to industry, often, with the good being available worldwide rapidly. Zara has not only

possess good designers that allow it manufacture needed high-street fashion, a reduced prices,

but it also has a rigid supply network which allows it to bring recent goods to the store in the

time given which is four months faster than its rivals can obtain.

Resources –

Tangible Resources

Zara is aided financially from its parent firm, Inditex, which has obtained profit of $1.9 billion

Euros (Inditex, 2011). The firm has several varied logos globally. Actually, as per Waterlow

(2012), it overcame Louboutin in French court for the logo on red soles which enabled them to

raise their revenue from shoe manufacture. Trademarks and different brands are tangible assets

that can aid Zara sustain its brand identity. With the quick development in the current years, the

firm has become the top most fast fashion brands worldwide (Helm, 2008).

Intangible Resources

Zara has a 200-people skilled stylist team who often upgrade new data on fashion drifts for Zara

so they can constantly dominate the fashion industry (Inditex, 2011). Moreover, effective ITC

systems aid Zara to be drifty (Mihm, 2010). Then, combined IT networks allow for long-lasting

ties amongst the firm’s stylists, distributors, and producing facilities. Zara has a different built-in

stock model which provides it with a competitive edge on brand image, as they pursue to be seen

as a firm that can quickly vary and keep up with varying fashion drifts. Quick inventory turnover

also brings a feel of freshness and to consumers (Caro & Gallien, 2010).

Capabilities – To provide consumers a trendy image, Zara builds a time-compressed

manufacture procedure. It only takes four weeks for a cycle from style to deliver in shops, rather

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than the old six-month period. (Mihm, 2010). The vertical integration network also gets a

flexible system for Zara to adapt trends (Deschamps, 2012).

As per Mihm (2010), Zara expends less on ads in relation to their rivals. For instance, Gap has

several TV and magazine ads while Zara keeps their ads to a minimum, leading to reduced cost

marketing plans. It emphasizes on introducing affordable quality goods to their buyers and

building brand awareness by WOM, and sustaining repute by quickly adopting to varying

fashion drifts.

The HR group is important and systematic and new entrees would require a specific amount of

resources to copy it. Though, one of Zara’s major rivals, H&M, also has an excellent stylist

group creating several fashionable goods for all, Zara’s quick adaptable stylist group is

considered unusual in the fast fashion clothing market. Therefore, this is considered as a core

capability for Zara.

Competitive advantage – Zara gets a competitive advantage by providing consumer fashionable

garments at lower prices. A group of 200 stylists is accountable for changing the current fashion

into goods. The garments were changed yearly with 11,000 different products.

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 KNOWLEDGE MANAGEMENT

Article: Analysis of the effects of ICTs in knowledge management

and innovation by María Teresa García-Álvarez

There is a widespread literature about the examination of knowledge management idea. In this

concept, Lindblom and Tikkanen (2010) contemplate KM as a known plan of obtaining the

correct knowledge to the right individuals at the correct time and aiding them with information

into activities in ways that will enhance firm rivalry. Bueno, Aragón, Salmador, and García

(2010) suggested that KM is the procedure of building, acquiring and transfer of knowledge that

is demonstrated in the behavior of the firm. Likewise, Nonaka and Takeuchi (1995) reflect KM

as a firm’s ability to establish new information and transfer it in the firm and implement it in all

the firm procedures.

The figure shows

procedures, in several stages: socialization, exteriorization, interiorization and combination. By

combining socialization, information is explored.

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Externalization and internalization enables firms to gather information. Then these procedures

create the likelihood of transferring it so it can be implemented in the management by means of

the creation of procedures.

Next, we are going to examine their major features:

Socialization - This includes transferring on tactic information to create part of other tactic

information. This means, it is on the basis of the knowing and adaptation of the information

gained form the communication of individuals, through examination, copying and practice. For

instance, when workers gain recent information in a firm directly from their executives and

colleagues.

The examination of the ZARA Group demonstrates the presence of this kind of ICTs as the firm

has an actual information system. This enables the firm to have computer system that joins all its

stores worldwide in real time for reasons related to delivery control. This way, HQs have

knowledge about the clothes that are sold in every outlet and hence is aware at any time what

production levels are essential to deliver them. It’s one of the most essential assets of continued

competitive advantage of this team relating their rivals. In this perspective, this technology

enables Zara to possess limited, unique, nonsubstituted, and valuable sources with the following

enhancement of value creation plans.

Similarly, Zara has skills which allow discussion amongst several workers by ways of Wi-Fi,

videoconferencing and e-mail. For instance, utilizing these computer systems, the workers obtain

new information from their colleagues directly.

Hence, this enables Zara to gather tactic information from other tactic information. This new

information is then added to its entire data. These technologies have had a positive impact on

knowledge socialization.

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Exteriorization - This includes of shifting from tactic to explicit information. Hence, the aim is

to make tactic information in way of any kind of medium that would enable others to grasp it like

a language. For instance, when transferred information is encrypted by ways of the interaction

amongst workers and executives in a firm which include the likelihood of transferring it. The

examination of the chosen firm demonstrates the presence of this kind of technologies. In

relation to the search for data relating customer choices, Zara deals with “cool hunters”. The aim

of these workers is to recognize inventions and fashion to result new goods that are successful in

shops and on the street. This knowledge is transferred through the internet to Zara’s stylists for

execution into final products. Videoconferencing and e-mail are essential in this procedure.

Hence, a computer system enables Zara to change tactic information to explicit. This is then

mixed in the firm’s environment.

Interiorization - This includes of shifting from explicit to tactic information. In this procedure,

information is taken and is later considers as one’s information. It is the outcome of learning and

execution. For instance, when employees internalize the information in the systems and files of

the firm and then transform them to their knowledge. Though these systems are usual in clothing

industry Zara had enhanced them in function of its particular features and it has enables this team

to be one of the top most firms in that segment. In this perspective, Zara has created e-commerce

which allows the sales of its products over the internet. Similarly, it has private extranet where

firm rules exist. Firm suppliers also have access to it where the labeling and packaging

regulations are given. Also, the Inditex Group has built a group with five Spanish firms to create

a permanent active link between the firm and the university with the aim of encouraging the

transfer of information and technology. This enables the workers to internalize the information in

the files and systems used in the firm management and then transfer it into their knowledge.

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Combination - This includes shifting form one kind of explicit information to another. It is on

the basis of transfer, association and creation of explicit information from several resources,

aiding the establishment of recent information of the same kind. For instance, when explicit

information of a firm is integrated socialization procedure is expanded. Another example is the

periodical results gained form store subordinates over the internet. These results consist of

preferences, choices and ideas of the customer. This is then transferred to several sectors in the

firm. This aids the procedure by which Zara adjusts its outcome to the actual demand.

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