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1. Resource-Based Approach
Internal strategic factors:
Critical strengths and weaknesses
that are likely to determine if the firm
will be able to take advantage of
opportunities while avoiding threats.

2. • A resource is an asset, competency, process,
skill, or knowledge controlled by the corporation.
Barney’s VRIO Framework to evaluate firm’s key
resources:
• Value: Does it provide competitive advantage?
• Rareness: Do other competitors possess it?
• Imitability: Is it costly for others to imitate?
• Organization: Is the firm organized to exploit the
resource?

3. Grant’s resource-based approach
to strategy analysis
1. Identify and classify the firm’s resources
in terms of strengths and weaknesses.
2. Combine the firm’s strengths into specific
capabilities.
- Core Competencies
- Distinctive Competencies

4. 3. Appraise the profit potential of these
resources and capabilities in terms of their
potential for sustainable competitive
advantage and the ability to harvest the
profits resulting from the use of these
resources and capabilities.

5. 4. Select the strategy that best exploits the
firm’s resources and capabilities relative to
external opportunities.
5. Identify resource gaps and invest in
upgrading weaknesses.

6. Determine The Sustainability of An
Advantage
Durability: rate at which a firm’s underlying
resources and capabilities depreciate or
become obsolete.
Imitability: rate at which a firm’s underlying
resources and capabilities can be
duplicated.

7. • Transparency: speed with which other
firms can understand the relationship of
resources and capabilities supporting a
successful firm’s strategy.
Example: Gillette’s Sensor razor design
was very difficult to copy, because the
manufacturing equipment needed to
produce it was very expensive and
complicated.

8. • Transferability: the ability of competitors to
gather the resources and capabilities
necessary to support a competitive
challenge.
Example: It may be very difficult for a
wine maker to duplicate a French winery’s
key resources of land and climate, if the
imitator is located in India.

9. • Replicability: ability of competitors to use
duplicated resources and capabilities to imitate
the other firm’s success.
Example: Wal-Mart’s sophisticated cross-
docking system, which provides the company a
substantial cost advantage by improving its
ability to reduce shipping and handling costs.
While Wal-Mart has the same resources in terms
of retail space, employee skills, and equipment
as many other discount chains, it has the unique
capability to manage its resources for maximum
productivity.

10. • Retail cross-dock example: Using the
cross-dock technique, Wal-Mart was able
to effectively leverage their logistical
volume into a core strategic competency.

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