An Evaluation of Apple's Competitive Advantage Using the Resource-Based View (Rbv)

2263 Words Feb 6th, 2012 10 Pages
Contents

Contents 1
Main Body 2/5
Conclusion 5
References 6/7
Appendices 7

List of Figures

Figure 1: Resource-based model 3

Critically evaluate the resource-based view (RBV) of the firm as a means of explaining the sources and strength of the competitive advantage of Apple.

Apple is an American multinational corporation which designs, manufactures and markets a range of consumer electronics and software products (Apple Inc., 2008). At the end of last fiscal year, Apple’s worldwide annual sales amounted to $32.5 billion, an increase of 35% from 2007 (Apple Inc., 2008). Not surprisingly then, was Apple voted America’s most admired company, also topping the global survey (Fortune,
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Johnson et al (2004) differentiate between tangible (e.g. offices and retail stores, factories, capital etc) and intangible resources (e.g. knowledge, reputation, management etc).

Barney (1991) lists four criteria which a firm resource must have to hold the potential of SCA: value, rareness, imperfect imitability, and substitutability (see Figure 1).

Resource
Heterogeneity
Resource
Immobility
Value
Rareness
Imperfect Imitability
Substitutability
Sustained Competitive Advantage

Figure 1: Resource-based model (adapted from Barney, 1991)

If a firm’s resources are both valuable and rare, a firm may achieve a competitive advantage (Newbert, 2008). A resource is considered valuable when it improves the efficiency and effectiveness of a strategy, and when it exploits external opportunities or neutralises external threats (Barney, 1991). This wording is somewhat confusing as it draws a direct connection with the environmental model, i.e. Porter’s (1985) five forces. The ‘value’ variable could therefore be rendered exogenous to the RBV (Priem and Butler, 2001). On the other hand, Peteraf (1993) praises the model for its internal focus and ability to uncover potential sources of competitive advantage which cannot be attributed to the external environment, notably because areas of value are often so difficult to identify (Newbert, 2008). The term ‘potential’ is used because not all resources have the ability to create a SCA
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