3&4.

Resource Based View and Perspectives on

Value

Pushkar Jha
2020
Outline
• Value Chain
• Value Grid
• RBV

Value : Activities, Resources and Capabilities

 VALUE

• Value is created when the price that the customer is willing to pay for
a product exceeds the firm’s cost of manufacturing the product.

• What is the source of value ?

• How ‘able’ is the entity to sustainably create, generate and appropriate value?
 The Value Chain

Activities Firm Infrastructure

Human Resources Management

Support

Technology Development
Margin
Procurement
Through
Value
Activities
Primary

Inbound Outbound Sales &

Operations Service
Logistics Logistics Marketing

Offering
 Strategic Significance of value chain

An organisation's Value Chain is:

• A system of interdependent activities

• Part of larger ‘Value System’

Supplier VC Firm VC Channel VC Buyer VC

LETS EXPAND THE IDEA OF THE VALUE SYSTEM

 v

Strategy of Position

To more of a v v
v
Strategy of Movement

v
v
 Value Proposition

• Defines how a company’s product or service

fulfills the needs of customers
• Questions to ask:
 Why will customers choose to do business with
your firm instead of another?
 What will your firm provide that others do not or
cannot?
Three Key Ingredients of a Business Model

1. Value proposition:
• Why should the customer buy from you?
2. Core Markets:
• What marketplace do you intend to serve, and at
what size and scope?
3. Revenue Generation:
• How will you earn money?
https://www.youtube.com/watch?v=aM_rZMT0EWQ
 Firms may have Same Value Chain= Different
BMs
Firm Infrastructure Back to slide 7

Activities
Support
Human Resources Management

Technology Development

Procurement
Activities
Primary

Margin
Inbound Outbound Sales & Through
Operations Service
Logistics Logistics Marketing Value

Business Model 1 Business Model 2 Business Model 3

 VALUE GRID …

Toyota

Intel

Honda

(Pil and Holweg, 2006)

 VRIN idea….

valuable -- meaning that they must be a source of greater value, in terms of

relative costs and benefits, than similar resources in competing firms

rare -- rareness implies that the resource must be rare in the sense that it is
scarce relative to demand for its use or what it produces

inimitable -- it is difficult to imitate

Non-substitutable -- other different types of resources cannot be functional

substitutes

Tests of Inimitability, durability (maintaining the resource), appropriability

(value from the resource) , substitutability + better than competition

(the ‘O’ organized Idea making VRIO )

12
Sustainable Advantage - The ‘Golden’ Triangle

Sustainable Comp Advantage

SCA

Activities Resources

Capabilities
13
 Capabilities
They Consist of (examples..)……
• Business processes
• Support infrastructure
• Integration across boundaries
• Critical coordination skills
….the idea has evolved ……
The relevant question for understanding
capabilities is not “who knows how?”
But
“How can we get done what we need to
get done?” and “How easily and
effectively can access, deploy or apply the
resources we need?”
14
 • Ordinary capabilities are like best practices. They typically
start in one or two companies and spread to the entire
industry.

• Dynamic capabilities/ Core capabilties

unlike ordinary capabilities, are idiosyncratic:
unique to each company and rooted in the
company’s history. They’re captured not just in
routines, but in business models that go back
decades and that are difficult to imitate. Lynda
Gratton and the late Sumantra Ghoshal called
them “signature processes.” They are “the way
things are done around here.”

• Core competency (organisational/ aggregate level)

aggregates of specialized expertise, where synergy is
created) that has sustainable value and broad
applicability………..
Reflections ……. …

The Schools as Processes

Unpredictable,
Environmental Cognitive
Confusing
Learning
Power
(Micro)
External
World Cultural
As
Configuration

Power
value chain..value grid
(Macro)
Five forces generic strategies
Positioning
Comprehensible,
Planning resourcing
Design SWOT Entrepreneurial
Controllable prioritisation, eta
Rational Internal Process As Natural