Looking Inside for Competitive Advantage

Essay by hopia February 2005

download word file, 6 pages 5.0

What do we look for in order to attain competitive advantage? Where will we look? How will we find it? Well, there are a lot of questions that could be asked so that we can source out a firm's competitive advantage. Several things are needs to be assessed, evaluated and decided on in order to formulate a firm's competitive advantage. For Jay Barney, the author of Looking inside for competitive advantage, a company's competitive advantage can be source out from its external opportunities and threats and its internal strengths and weaknesses. From these environmental factors, we can now pick up the strengths, weaknesses, opportunities and threats of the company. Along with these strengths, weaknesses, opportunities and threats, are resources and capabilities that either utilize the opportunities and strengths or counteract with threats and weaknesses of the firm. Resources and capabilities have the potential to be the basis for competitive advantage when they are valuable, rare, costly to imitate, and non-substitutable.

When these criteria are met, resources and capabilities become core competencies which where we can get our competitive advantage. After identifying the resources and capabilities of the company, we now have to consider evaluating each resource and capability by applying Barney's cross-examination of the value, rareness, imitability and organization of each factor.

First is the question of value, the resources and capabilities is significant when it facilitate the employment of opportunities and/or the disengagement of threats. Also, a dynamic resource or capability is needed because even though they have been remarkable before in giving value, we still live in a world where change is present. Being dynamic allows the company to be flexible and able to respond quickly to unpredicted and unexpected changes in the environment. According to Jay Barney, some environmental changes are so evident that few, if any,