Executive Summary

Resource based view (RBV) focuses on the concept of difficult-to- imitate attributes of the firm
as sources of superior performance and competitive advantage (Barney, 1986; Hamel and
Prahalad, 1996). Resources that cannot be easily transferred or purchased, that require
an
extended learning curve or a major change in the organization climate and culture, are
more
likely to be unique to the organization and, therefore, more difficult to imitate by
competitors.
The RBV has been useful in identifying the basis by which the resources and capabilities of
a
firm serve as sources of sustained competitive advantage (e.g., Wernerfelt, 1984; Barney, 1991;
Peteraf, 1993). As such, resources and capabilities are fundamental underpinnings of any
source
of advantage (Rumelt, Schendel, & Teece, 1991). Valuable resources are termed strategic assets
(Barney, 1991; Amit & Schoemaker, 1993). The RBV asserts that ownership and control
of
strategic assets determines which organizations will earn superior profits and enjoy a position
of
competitive advantage over others.

The RBV deals with competitive business environment faced by firms but take an inside-
out
approach i.e. it starts with analysis of firm’s internal environment. As such RBV is often
considered as an alternate to Porter’s five force model. The RBV emphasizes internal resources
and capabilities of firm in formulating strategy to achieve sustainable competitive advantages in
the market place. Internal resources and capabilities determine strategic choices made by firms
while competing in its external business environment. Firm’s abilities also allow some firms to
add value in customer value chain, develop new products or expand in new market place.
When
firm’s capabilities are considered as paramount in the creation of competitive advantages, it
will
focus on reconfiguration of value chain activities. This is necessary as it provides opportunity to
identify the capabilities within value chain activities which provide it with competitive
advantages. The RBV draws upon the resources and capabilities that reside within the
organizations in order to develop sustainable competitive advantages. Resources may be
considered as inputs that enable firms to carry out its activities.

According to RBV, not all the resources of firm will be strategic resources and hence sources of
competitive advantage. Competitive advantage occurs only when there is a situation of
resource
heterogeneity (different resources across firms) and resource immobility (the inability of
competing firms to obtain resources from other firms)
Executive Summary

Resource based view (RBV) focuses on the concept of difficult-to- imitate attributes of the firm
as sources of superior performance and competitive advantage (Barney, 1986; Hamel and
Prahalad, 1996). Resources that cannot be easily transferred or purchased, that require
an
extended learning curve or a major change in the organization climate and culture, are
more
likely to be unique to the organization and, therefore, more difficult to imitate by
competitors.
The RBV has been useful in identifying the basis by which the resources and capabilities of
a
firm serve as sources of sustained competitive advantage (e.g., Wernerfelt, 1984; Barney, 1991;
Peteraf, 1993). As such, resources and capabilities are fundamental underpinnings of any
source
of advantage (Rumelt, Schendel, & Teece, 1991). Valuable resources are termed strategic assets
(Barney, 1991; Amit & Schoemaker, 1993). The RBV asserts that ownership and control
of
strategic assets determines which organizations will earn superior profits and enjoy a position
of
competitive advantage over others.

The RBV deals with competitive business environment faced by firms but take an inside-
out
approach i.e. it starts with analysis of firm’s internal environment. As such RBV is often
considered as an alternate to Porter’s five force model. The RBV emphasizes internal resources
and capabilities of firm in formulating strategy to achieve sustainable competitive advantages in
the market place. Internal resources and capabilities determine strategic choices made by firms
while competing in its external business environment. Firm’s abilities also allow some firms to
add value in customer value chain, develop new products or expand in new market place.
When
firm’s capabilities are considered as paramount in the creation of competitive advantages, it
will
focus on reconfiguration of value chain activities. This is necessary as it provides opportunity to
identify the capabilities within value chain activities which provide it with competitive
advantages. The RBV draws upon the resources and capabilities that reside within the
organizations in order to develop sustainable competitive advantages. Resources may be
considered as inputs that enable firms to carry out its activities.

According to RBV, not all the resources of firm will be strategic resources and hence sources of
competitive advantage. Competitive advantage occurs only when there is a situation of
resource
heterogeneity (different resources across firms) and resource immobility (the inability of
competing firms to obtain resources from other firms)
 Resource-Based Theory

(A. Sadawi, A. Fouad, A. Yahia, H. Abdelhakim, L. Abdelaziz)

Arab Academy for Science, Technology and Maritime Transport (AASTMT)

Global Supply Chain

Dr. Sama Gad
November 15, 2024
Introduction
RBT began to take shape in the 1980s.The antecedent of RBT was the Theory of the Growth of
the Firm. Later, during the 1990s, Jay Barney’s work was critical to the emergence of RBT and
became the dominant paradigm in strategic management and strategic planning.
RBT provides a framework to highlight and predict the fundamentals of organization
performance and competitive advantage.
The RBV focuses managerial attention on the firm's internal resources in an effort to identify
those assets, capabilities and competencies with the potential to deliver sustained and superior
competitive advantages.
The Resource-Based View (RBV) theory has been extensively applied across various domains of
management research, particularly in understanding the competitive advantage firms achieve
through the unique resources they control. The theory was developed in 1991 by JB. Barney, a
renowned Strategic Management thinker from the University of Utah. The RBV theory suggests
that a company's resources and capabilities are the key drivers of its sustained competitive
advantage. RBV posits that competitive advantage derives from utilizing a firm’s unique
resources that are valuable, rare, inimitable, and non-substitutable

Resource-Based Theory (RBT)

The resource-based theory is a model that sees resources as key to superior firm performance
There are two underlying assumptions of the RBT related to the explanation of how firm-based
resources generate sustained competitive advantage and why some organizations may
continually outperform others by gaining higher competitiveness. The two critical assumptions
of RBV are that resources must also be heterogeneous and immobile.
Heterogeneity is the first assumption is that skills, capabilities and other resources that
organizations possess differ from one company to another. If organizations had the same
amount and mix of resources, they could not employ different strategies to outcompete each
other.
What one company would do, the other could simply follow and no competitive advantage
could be achieved. This is the scenario of perfect competition, yet real-world markets are far
from perfectly competitive and some companies, which are exposed to the same competitive
forces (same external conditions), are able to implement different strategies and outperform
each other. Therefore, RBV assumes that companies achieve competitive advantage by using
their different bundles of resources.
Immobility is the second assumption of RBV is that resources are not mobile and do not move
from company to company, at least in the short-run. Due to this immobility, companies cannot
replicate rivals’ resources and implement the same strategies. Intangible resources, such as
brand equity, processes, knowledge or intellectual property, are usually immobile.
The RBT of the firm shows that a company’s human capital management, technology control,
and innovation, in addition to R&D practices, can make a contribution appreciably to
maintaining competitive gain and are hard to imitate. These valuable resources (i.e. resources
that are costly and difficult to imitate) are possessed by few firms, those firms that are able to
control these resources potentially generate sustained competitive advantage.
The source of firm resources can vary, coming from both within and outside the organization.
Internal resources are, for example, R&D capabilities, logistics, brand management, and low-
cost processes, while external resources are for instance: the role of suppliers, customer
demand, and technology change.
Company resources can be grouped into three categories:
1-Physical capital resources refer to company equipment, plant, its access to raw materials,
geographical location and they include the physical technology utilized by a company.
2-Human capital resources encompass experience, intelligence, training, relationships, and
insights from employees, such as managers and workers in a company.
3- Organizational capital resources refer to a company’s formal structure, the company’s
formal and informal system, which comprises planning, managing, and coordinating systems.
Organizational resources also relate to informal relations amongst divisions within a company
and the relationships between a company and its business environments.
Categorization of company resources on RBT can also build upon two groups of tangible and
intangible assets.
Tangible resources include: physical assets such as financial resources and human resources
including real estate, raw materials machinery, plant, inventory, brands, patents and
trademarks and cash.
Intangible resources may be embedded in organizational routines or practices such as an
organization's reputation, culture, knowledge or know-how, accumulated experience,
relationships with customers, suppliers or other key stakeholders.

RBT includes four conditions to assess whether a resource has the potential to become and
generate a sustainable competitive advantage. The four conditions are:
(1) being valued (2) being rare (3) immobility (4) sustainability.
The four terms, known as the VRIS framework, are the characteristics that a firm must have as
the strategic planning reference and hold the prospect of sustained competitive advantage.
First, the resource must be valuable, which refers to a condition that exploits the opportunities
and/or threats in a firm’s environment. For example, a company may have a secret formula to
produce a specific product that only this company has.
Second, the resource must be rare, in the sense that it is rare or unique among the firm’s
current and potential competition. For instance, a company may have the capability of a
worldwide distribution network.
Third, the resource must be imperfectly imitable: the valuable and scarce resources owned by a
firm cannot be easily obtained by other firms that do not possess these resources. An example
of an imperfectly imitable condition is a globally recognized product or company brand, which
has no equivalent capability or resource that could be used by others.
The fourth and final condition is that the resources cannot be strategically duplicated or
substituted and that they are neither rare nor valuable or imperfectly imitable by other firms.
In development, the RBT framework presented in the VRIS model (valuable – rareness –
inimitable – substitutability) was later replaced by the VRIO model (valuable – rareness –
inimitability – organization)
The VRIO model proposes new criteria for the organizational embeddedness of a resource.
This criterion proposes that the importance of an organization is in the way of exploiting the
resource. It replaces the resource criterion concerning substitutability in the VRIS model.
The needs of the organization criterion suggest that the organization should focus on the
proper management (e.g., organization policies, and organized procedures) to manage the
valuable, rare, and imperfectly imitable resources and obtain their full competitive potential.
The VRIO model's introduction has acknowledged that the organization needs to leverage
resources effectively instead of being only possessed by the organization.
Although having heterogeneous and immobile resources is critical in achieving competitive
advantage, it is not enough alone if the firm wants to sustain it. (Barney) has identified a
framework that examines if resources are valuable, rare, costly to imitate and non-
substitutable.
The resources and capabilities that answer yes to all the questions are the sustained
competitive advantages.
The RBT framework using the VRIO model for sustained competitive advantage

Question of Value: Resources are valuable if they help organizations to increase the value
offered to the customers. This is done by increasing differentiation or/and decreasing the costs
of production. The resources that cannot meet this condition lead to competitive disadvantage.
Question of Rarity: Resources that can only be acquired by one or a few companies are
considered rare. When more than a few companies have the same resource or capability, it
results in competitive parity.
Question of Imitability: A company that has valuable and rare resources can achieve at least
temporary competitive advantage. However, the resource must also be costly to imitate or to
substitute for a rival if a company wants to achieve sustained competitive advantage.
Question of Organization: The resources itself do not confer any advantage for a company if it’s
not organized to capture the value from them. Only the firm that is capable to exploit the
valuable, rare and imitable resources can achieve sustained competitive advantage.
Resource-based view theory and its applications in supply chain management
In SCM, the perspective shifts the focus from external factors like market conditions, regulatory
changes, technological disruptions, and competition to internal capabilities such as logistics,
integration, and innovation.
The premise is that SCM effectiveness is significantly influenced by how well these intrinsic
resources are managed and leveraged, suggesting a deep interconnection between a firm's
resource base and its supply chain performance.
For example, technologies like Blockchain (BoT), Artificial Intelligence (AI), and the Internet of
Things (IoT) represent a strategic resource that potentially redefines competitive landscapes by
enhancing transparency, efficiency, and responsiveness.
These resources support various SCM activities, from procurement to distribution, enabling
firms to enhance operational efficiency and respond more effectively to market demands,
which directly influences the firm’s ability to achieve market success and operational resilience.
Sustained Competitive Advantage occurs when a firm can maintain above-normal performance
for a prolonged period.
This is achieved in SCM by derived from the ability to optimize supply chain operations in ways
that competitors cannot easily replicate.
For example, amazon company has developed a sophisticated logistics system that includes
advanced warehousing technologies and a highly efficient distribution network, which are
difficult for competitors to imitate quickly or cheaply.
Moreover, long-term relationships with suppliers and customers, which enhance trust and
cooperation, can also serve as a source of advantage edge in SCM, as these relationships are
built and maintained over time and are specific to the firm's context.
Finally, Rare resources and inimitable resources are those that
cannot be easily replicated or substituted by other firms.
These often include company culture, brand reputation, or deeply
integrated supplier networks that have developed over many years. For example, Zara’s fast-
fashion supply chain model, supported by its agile and integrated production and distribution
systems, serves as an inimitable resource because replicating such a model requires changes at
multiple levels of operations and coordination that are difficult to achieve quickly.
References
Halawi, L.A., Aronson, J.E., McCarthy, R.V., 2005. Resource Based view of Knowledge
Management for Competitive advantage. The Electronic Journal of Knowledge Management,
3(2), 75-86
Barney, J.B., 1991. Firm Resources and Sustained Competitive Advantage. Journal of
Management, 17(1), 99-120.
Bromiley, P., Rau, D., 2016. Operations management and the resource-based view: Another
view. Journal of Operations Management, 41, 95-106.
Mata, F. J., Fuerst, W. L., Barney, J. B., 1995. Information technology and sustained competitive
advantage: A resource-based analysis. MIS Quarterly, 19(4), 487.
Kozlenkova, I.V., Samaha, S.A. & Palmatier, R.W. Resource-based theory in marketing. J. of the
Acad. Mark. Sci. 42, 1–21 (2014).
Ahuja, G. and Katila, R. (2004), “Where do resources come from? The role of idiosyncrasic
situations”, Strategic Management Journal, Vol. 25, pp. 887-907.
Kraaijenbrink, J., J.C. Spender, and A.J. Groen. “The Resource-Based View: A Review and
Assessment of Its Critiques,” Journal of Management, (36:1), 2010, pp. 349-372.
Barney, J. (2012). Purchasing, supply chain management and sustained competitive advantage:
The relevance of resource‐ based theory. Journal of Supply Chain Management, 48(2), 36.
Helfat, C. E., & Peteraf, M. A. (2003). The dynamic resource‐based view: Capability lifecycles.
Strategic management journal, 24(10), 997-1010
Touboulic, A., & Walker, H. (2015). Theories in sustainable supply chain management: a
structured literature review. International Journal of Physical Distribution & Logistics
Management, 45(1/2), 16-42.
GlaxoSmithKline – Supply Chain Challenges
Regulatory and operational challenges
The frequent M&A activities implies a complex and laborious paper trail which requires re-
registration and labelling and compliance with regulatory frameworks of different countries.
With over 250 legal entities across the world and no centralized legal framework, printing and
other associated challenges emerge, each with different names that must appear on different
products sold in different countries. The complexity multiplies with the mergers owing to
labelling changes. Moreover, different markets have different schedules on when GSK must
incorporate the labelling changes.

Different departments could always make different packaging design changes, but the
communication of these changes, namely packaging specifications, graphics and artwork
changes across the length and breadth of the organization covering varied functions and divisions
is a herculean task in the least.

Countering Regulatory and operational challenges: Late pack customization

To counter the challenges of supplying to a multifaceted European market and low volume
niche segments, GSK implemented the late pack customization program. Typical production
runs were up to 30,000 packs for cost effectiveness but GSK would produce as low as 500 packs
to specific drugs at a time with this program.
For example, basic boxes were volume filled with blisters at the packaging warehouse and
shifted to the two distribution centers in Europe. At these centers, labels were clearly printed
online with country related information and automatically applied. Even country specific
leaflets were automatically attached. Quality was ensured with three two-dimensional bar
codes, one pre-printed on the top of the box, the other pre-printed on the leaflet and another
printed online on the label. Online inspection on the codes could be performed at one go owing
to their inline position.

Outsourcing/supplier challenges
One of GSK’s products (Aquafresh Floss‘N’Cap) is a prime example of the typical outsourcing
challenges. AFNC has a flip top containing dental floss and toothpaste in the tube. AFNC had
three custom designed sub-assemblies which had been outsourced to three different suppliers.
The suppliers worked in sequence on the custom designed cap. Once the package reaches GSK,
only filling of the tube with toothpaste remained. Coordination with these three cross Atlantic
suppliers, especially outside GSK’s manufacturing facilities was a challenging task. This also
included sharing proper specifications that met with all the design parameters of all suppliers
involved.
Countering Supplier/Outsourcing issues
GSK realizes the importance of finding and qualifying multiple suppliers to avoid any supply
disruptions. For instance, for its popular Advair Diskus device, GSK has three suppliers, two in
Europe and one in the US. The goal is to have enough capacity globally with all suppliers
producing identical components with identical tooling on identical machines. Meeting strict
regulations is of prime importance. Communication can play a vital role in establishing
coordination among multiple suppliers. GSK uses an electronic CAD package (Computer-
aided design). The CAD package has drawings indicating minor details and any subsequent
or ongoing review to every component to overcome communication gaps if any.

Finding alternate/multiple suppliers

GSK had an ugly experience early on; supply disruptions were rampant due to there a single
source supplier. Almost a decade ago, one of its sole resin supplier’s plants exploded. Due to
the absence of alternate suppliers, GSK consequently had to lose market share not to mention
customer goodwill, due to which customers had to do without critical drugs and life saving
devices. GSK wanted to mitigate and try and eliminate such situations. The challenge was 2-
fold: find alternate suppliers and they should be ones who complied with the regulations
authorities and supplied according to schedule.

Operational/production challenges
The foremost challenge in production processes was synchronizing with a varied number of
manufacturing locations and multiple suppliers. Different packaging and assembly lines,
implementing automation and advanced technology or process improvement programs
presented huge challenges. Some other considerations were quick machine setup, better
equipment availability, minimum production stoppages, and flexibility besides handling
innumerable design changes.

Countering Operational/production challenges

GSK has limited the number of equipment suppliers to reduce downtime. For instance, on one
packaging line it has one supplier Schubert’s four robotic systems. Robots do the cartooning
and case packing as well. In response, Schubert gives GSK the advantage of assigning a
dedicated and focused team that works for GSK alone. The team also has an office in GSK’s
plant itself. Healthy supplier relationships have helped GSK reduce downtime substantially.
Moreover, all equipment from a single supplier facilitates a better understanding of the
equipment functioning, than having disparate machines for same tasks. Thus training costs are
also less.