3&4. Resource Based View and Perspectives On Value: Pushkar Jha 2020

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..)…… The relevant question for understanding

capabilities is not “who knows how?”
• Business processes But
• Support infrastructure
“How can we get done what we need to
• Integration across boundaries get done?” and “How easily and
effectively can access, deploy or apply the
• Critical coordination skills resources we need?”
….the idea has evolved ……
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

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3&4.

Resource Based View and Perspectives on

Value : Activities, Resources and Capabilities

• What is the source of value ?

Activities Firm Infrastructure

Human Resources Management

Inbound Outbound Sales &

An organisation's Value Chain is:

• A system of interdependent activities

Supplier VC Firm VC Channel VC Buyer VC

LETS EXPAND THE IDEA OF THE VALUE SYSTEM

• Defines how a company’s product or service

Business Model 1 Business Model 2 Business Model 3

(Pil and Holweg, 2006)

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

inimitable -- it is difficult to imitate

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

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

(the ‘O’ organized Idea making VRIO )

Sustainable Comp Advantage

They Consist of (examples..)…… The relevant question for understanding

….the idea has evolved ……

• Dynamic capabilities/ Core capabilties

• Core competency (organisational/ aggregate level)

The Schools as Processes

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