Subject:
Identify, analyze and discuss Strategic issues for Costa according to the Resource based view (RBV) and its core competences.
Because the past decades have witnessed the rise of ultra-competitive markets, companies have strived to find efficient ways to differentiate themselves from their competitors. Consequently, a growing interest was granted as to how firm resources should be managed in order to achieve temporary competitive advantage and even sustained competitive advantage. According to an article of software business :’The Resource-Based View (RBV) holds that firms can earn sustainable above average returns only if they have superior resources and those resources are protected by some form of isolating mechanism
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The only tangible asset that Costa can be really proud of is the quality of their coffee. In fact, following a survey conducted by an independent research centre considered credible, Costa have been able to claim that ‘seven out of ten coffee lovers prefer Costa Coffee’s cappuccino”! Praising the ingredients used and the process (handmade) followed to make Costa’s coffees can only influence potential customers to come to Costa instead of one of its competitors, thus win competitive advantage (http://www.whitbreadannualreport0809.co.uk/chief-executives-review.aspx).
As we listen to Collis’s perception of competitive advantage - ‘Competitive advantage, whatever its source, ultimately can be attributed to the ownership of a valuable resource that enables the company to perform activities better or more cheaply than competitors.’ (David J Collis, Cynthia A Montgomery. Harvard Business Review. Boston: Jul/Aug 2008. Vol. 86, Iss. 7,8; pg. 140) - we can see that these tangible assets don’t really enable Costa to perform better than its prime competitors. It is therefore absolutely crucial, that the resources Costa utilizes respect Barney’s statement in order to enable Costa to gain competitive advantage; a resource must be: (1) Valuable in a way that it enables the company to conceive and implement strategies that develop its efficiency, (2) Rare, (3) Imperfectly imitable, and (4) Non-Substitutable (Jay Barney, (1991), “Firm resources and sustained
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
Acquisition and organisation of resources can be critical success factor in an organization. While on the other hand, change requires a firm to gain expand and utilise resource such as human, financial, knowledge as a crucial asset. Resource based approach supports this view and as Tywoniak (2007) claimed by that resource based view is the most dominant theory in history of management. This is achieved by targeting state of sustained competitive advantage by controlling resources and capabilities. This view emphasis on the need for a ‘fit’ among capabilities and external market, and since each firm has unique capabilities and resources, this result in achieving strategic
* Costa must define a generic strategy and concentrate on it through differentiation or cost leadership
the internal analysis of the firm and the external analysis of the industry and competitive environment
The resource-based view was developed to help emphasize internal capabilities as a means of creating competitive advantage (Henry, n.d.) In this view, the organization is comprised of a series of resources that are used by management. These resources are the source of new products and the internal improvements that help companies to better compete in the marketplace. There are two different types of resources tangible and intangible. The former category consists of physical assets, and is characterized as physical resources, human resources and capital resources. So physical resources are the buildings, machinery, materials and productive capacity. At Coca-Cola, the company's physical resources
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources.
Barney, J. (2004). Firm resources and Sustained Competitive Advantage. Strategy: Process Content Context: an international perspective, de Wit & Meyer , 285-292.
He suggested that sustained competitive advantage derives from the resources and capabilities a firm controls that are valuable, rare, imperfectly imitable, and not substitutable. He further added that the resources and capabilities can be viewed in form of tangible and intangible assets. There are four different categories of resources financial, physical, human, and organization.
Whitbread's (owned Costa Coffee) environmental policies and supply chain better than some other chains, but they are not too excited about either. The company's purchasing policy discussions palm oil, timber, cotton, sugar and meat, as well as corporate social responsibility report using more renewable energy needs in its. Other values are building a warm culture and a sense of belonging, where each one is welcome. The courage to take action that faces the position quo and look for new ways to develop their company. Being present, connecting with clearness and respect.
For a business to be successful and have a competitive advantage, it is important to evaluate the company’s resources and capabilities (Pitt & Koufopoulos, 2012). Resources in a company are the productive assets owned (tangible or intangible) whereas capabilities are what the company can do with this (Grant, 2010). “Establishing competitive
Competitive strategy, after Porter, came to be defined as the strategy of a business unit which seeks to achieve sustainable Competitive Advantage (SCA). The literature on strategy deems the market-based view (MBV) and the resource –based view (RBV) as two approaches to giving businesses the competitive edge they need to compete in their industries. Aside from having competitive advantage as their ultimate goal, the two approaches are also similar in the sense that they both make use of particular tools and models in their undertakings. They also differ in numerous ways,
Costa can only be as successful as the plan it implements. Saving the world from mediocre coffee and unsustainable practices are goals that must be attained.
This strategy emphasizes the use of an organization’s resources and capabilities to achieve a core competence that cannot be imitated by competitors. Furthermore, the resource based school argues that if an organization distinctively improves its internal capability; that is being able to have effective inside machinery to deliver products and services to customers, the organization will enjoy a massive advantage in the market. This school also argues that in order to have a competitive advantage, an organization must have resource and capabilities that are sophisticated to those of competitors (QuickMBA,
The resource-based view(RBV), based on the internal environment of a company, explains the performance differences among firms in an assumption of that having a high performance (Wernerfelt,1984) are made up of bundles of resources that give them advantages in the maketing(Barney and Arikan, 2001). It figures out the resources are valuable, rare, costly-imitated and have an organizational orientation, also known as VRIO framework(Barney, 2002). The resources, refer to the
For transforming a short-run competitive advantage into a sustained competitive advantage we require resources that are heterogeneous in nature and not perfectly mobile. This translates into valuable resources that are neither perfectly imitable nor substitutable without great effort. If these conditions are fulfilled then the bundle of resources can sustain the firm's above average returns.