1. COMPETING ON
RESOURCES
A COMPREHENSIVE STUDY OF ARTICLE BY DAVID J. COLLIS AND
CYNTHIA A. MONTGOMERY
SR8_HIMANSHU ARORA

2. FLOW OF PRESENTATION
1. BRIEF HISTORY OF STRATEGY
2. EVOLUTION OF STRATEGY THEORIES
3. RESOURCE BASED VIEW FOR STRATEGY
4. COMPETITIVELY VALUABLE RESOURCES
5. STRATEGIC IMPLICATION
6. INVESTING IN RESOURCES
7. UPGRADING RESOURCES
8. LEVERAGING RESOURCES
9. LEARNINGS

3. BRIEF HISTORY OF STRATEGY
• Strategy: Match between what a company can do within the universe of
what it might do; (The Concept of Corporate Strategy: Richard D. Irwin)
• This highlighted organisation‟s strengths and weaknesses with respect to
environmental opportunities and threats
• This framework, however, gave very few specific insights about how to assess
either side of the above equation
• There was a need for specific tools, framework

4. EVOLUTION OF STRATEGY
THEORIES
Porter‟s Competitive
Strategy
Core Competence
Resource Based View
(RBV)
• Structure of industry
determines state of
competition &
profitability
• Structural forces
(Porter‟s Five) set
the base for
individual corporate
strategies
• Emphasized
importance of skills
& collective learning
in the organisation
• This view holds that
roots of competitive
advantage are
within the
organisation
• Acknowledges
importance of
company specific
resources, yet in the
context of
competitive
environment
• Relies on economic
reasoning

5. RESOURSE BASED VIEW FOR
STRATEGY
• This view combines Internal analysis within companies with the External
analysis of industries & competitive environment
• RBV sees companies as very different bundles of physical & intangible assets
and capabilities
• These assets & capabilities determine a company‟s effectiveness &
efficiency in performing its functions
• So, best and most appropriate stock of resources guarantee a position for
success
• Hence a company must enquire into what the most valuable resources are?

6. COMPETITIVELY VALUABLE
RESOURCES
• There are 5 tests (questions) to determine whether a resource is valuable with
respect to the industry dynamics
1.
2.
3.
4.
The test of inimitability: Is the resource hard to copy?
The test of durability: How quickly does this resource depreciate?
The test of appropriability: Who captures the value that the resource creates?
The test of substitutability: Can a unique resource be trumped by a different
resource?
5. The test of competitive superiority: Whose resource is really better?

7. STRATEGIC IMPLICATIONS
• Managers should identify & build their strategies on resources that meet the
Five Tests
Managers must therefore continually are intangible like organisational
• Many a times, best of these resources invest in and upgrade their resources,
howevertechnology, transformational leader etc.
culture, good those resources are today, and leverage them with effective
strategies into attractive industries other ones to form functional policies
• These resources must be bundled with in which they can contribute to a
competitive advantage
& activities and differentiate your positioning; mere availability is not enough
• However, companies must realize that the value of these resources is
inevitably eroded by time and competition

8. INVESTING IN RESOURCES
• Corporate strategy: Continual investment in building & maintaining valuable
resources
• Theory of core competence identifies that often the resources take a back
seat to optimizing current divisional profitability
• So, the corporate office has to act as a guardian of the „crown jewels‟ of the
company
• However, caution must be taken as core competencies may not be what
the industry requires and investing thus may become redundant

9. UPGRADING RESOURCES
• Companies may find themselves in a situation where they don‟t possess
valuable resources or they have been imitated by competitors
• Hence companies must constantly upgrade the number and quality of their
resources
• Approaches to upgrading
• Adding new resources
• Upgrading to alternative resources that are threatening company‟s current
capabilities
• Upgrading its resources in order to move into a structurally more attractive
industry

10. LEVERAGING RESOURCES
• Question a strategist must ask: “how far can the company‟s valuable
resources be extended across markets?”
• However, corporate diversification often falls prey to 3 common & costly
strategic errors
• Managers overestimate the transferability of resources; they themselves can‟t
imitate their resources across different markets
• Managers overestimate their ability to compete in highly profitable industries;
entry barriers are usually resource barriers as well
• Managers assume that leveraging generic resources, like lean manufacturing,
will fetch them competitive advantage in the new market without even studying
industry dynamics
• Despite pitfalls, rewards for leveraging resources are high

11. LEARNINGS
Whether a company is building a strategy based on core competencies,
learning organisation or organisational culture, these can all be interpreted as
building a unique set of resources.
However the selection and use of these resources must be done with a sharp
eye on the dynamic industry context and competitive situation.

12. THANK YOU FOR YOUR TIME!
HIMANSHU ARORA
1301-528
SECTION – B
PGDM 2013-15