Find a firm that has recently been involved in a merger or acquisition or alliance with another firm (e.g., from a recent article on wsj.com).

BUSMHR 4490 Participation Assignment   The following optional assignment is worth 4 points: (1)Find a firm that has recently been involved in a…

BUSMHR 4490 Participation Assignment

 

The following optional assignment is worth 4 points:

  • Find a firm that has recently been involved in a merger or acquisition or alliance with another firm (e.g., from a recent article on wsj.com).
  • Enumerate the resource and/or resource bundle (i.e., groups of resources) shared as a result of this (refer to Table 1).
  • Use Table 2 and Table 3 as a checklist to describe the value, rarity, inimitability and organization of the resource base, and whether you expect the firm to achieve and sustain competitive advantage.
  • Use a 1-2 page memo format to complete the assignment (due in the dropbox by Dec 1st, no exceptions).

Table 1: Types of Resources

Tangible Resources
Financial ·    Firm’s cash and cash equivalents

·    Firm’s capacity to raise equity

·    Firm’s borrowing capacity
Physical ·    Modern plant and facilities

·    Favorable manufacturing locations

·    State-of-the-art machinery and equipment
Technological ·    Trade secrets

·    Innovative production processes

·    Patents, copyrights, trademarks
Organizational ·    Effective strategic planning process

·    Excellent evaluation and control systems
Intangible Resources
Human ·    Experience and capabilities of employees

·    Trust

·    Managerial skills

·    Firm-specific practices and procedures/culture
Innovation and Creativity ·    Technical and scientific skills

·    Innovation capacities
Reputation ·    Brand name

·    Reputation with customers for quality and reliability

·    Reputation with suppliers for fairness, non-zero-sum relationships
Organizational Capabilities
·  Firm competences or skills the firm employs to transfer inputs to outputs

·  Capacity to combine tangible and intangible resources, using firm processes to attain desired end

Examples
·  Outstanding customer service

·  Excellent product development capabilities

 ·  Innovativeness or products and services

·  Ability to hire, motivate, and retain human capital

 

Sources: Adapted from Barney (1991); Grant (2010); Dess et al. (2011); Barney and Hesterly (2012); and Hitt et al. (2013)

Table 2: VRIO Definitions and Examples

Third-Order Constructs Questions Sample Illustration
V “The Question of Value: Does a resource enable a firm to exploit an environmental opportunity, and/or neutralize an environmental threat?”

 

 The joint venture allowed the firms to exploit an opportunity to sell insurance and capture fee income during a down market environment (recession 2007-2009), and a period of low interest rates (neutralizing a threat).
R

 

 “The Question of Rarity: Is a resource currently controlled by only a small number of competing firms?”

 

 The insurer and community bank controls the “virtual agency” and the resource is unique to these two firms. The tangible/intangible resources, which underpin the joint venture and the “virtual” agency, are rare.

 
I

 

 

 “The Question of Imitability: Do firms without a resource face a cost disadvantage in obtaining or developing it?” Firms would face a disadvantage in that the resource cannot be bought, and to develop it would be cost prohibitive as the insurer has bundled the capacity with others not available to rival firms (e.g., global alliances regarding insurance providers).

 
O

 

 “The Question of Organization: Are a firm’s other policies and procedures organized to support the exploitation of its valuable, rare, and costly-to-imitate resources?” The policies and procedures that the insurer and bank have developed allow a seamless referral generating system, designed to capture a market that is estimated to bring in $10.5 million in net new revenue to the firms.

 

Table 3: VRIO Checklist for Practitioners

Valuable? Rare? Costly to imitate? Exploited by the organization? Competitive implications
 

No

  

–

  

–

  

–

  

Competitive disadvantage
 

Yes

  

No

  

–

  

–

  

Competitive parity
 

Yes

  

Yes

  

No

  

–

  

Temporary competitive advantage
 

Yes

  

Yes

  

Yes

  

No

  

Unexploited competitive advantage
 

Yes

  

Yes

  

Yes

  

Yes

  

Sustained competitive advantage

 

Source: Adapted from Barney and Hesterly (2012).

 

 

 

 

 

 

 

 

 

Figure 1: The Making Strategies Work Process

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