Resource-Based View (RBV) and SWOT Analysis Explained

Posted on Mar 14, 2025 in Business Administration and Innovation Management

Internal Analysis: Understanding Resources, Competencies, and SWOT

Definitions
A competence is:
  • An attribute or collection of attributes possessed by most organizations in a sector.
A core competence is:
  • An attribute or collection of attributes specific to an organization, enabling above-average performance.
A resource is:
  • An input employed in the activities of the business.
RBV Theory views a firm as:
  • A bundle of resources and competencies creating distinctive capability and competitive advantage.

Resources

Scarce Resources: Limited in supply
  • Tangible Resources: Physical assets like plant, labor, and finance.
  • Intangible Resources: Non-physical assets like information, reputation, and knowledge.
Free Resources: Available naturally (air, sea, climate).

4 Categories of Resources

  • Physical Resources: Machines, buildings, production capacity. Their age, condition, capacity, and location determine their usefulness.
  • Financial Resources: Capital, cash, debtors, creditors, and suppliers of money (shareholders, bankers, etc.).
  • Human Resources: Mix of skills, knowledge, and demographics of employees and networks.
  • Intellectual Capital: Intangible resources including patents, brands, business systems, and customer databases.

RBV Assumptions

1st Assumption: Resource Heterogeneity
Skills, capabilities, and resources differ across organizations. If all organizations had the same resources, they couldn’t outperform each other.
2nd Assumption: Resource Immobility
Resources are not easily mobile between companies, especially in the short run. This immobility prevents replication of rivals’ resources and strategies. Intangible resources like brand equity, processes, knowledge, and intellectual property are typically immobile.

VRIO Resources

  • Valuable: Does the resource provide value?
  • Rare: Is the resource rare?
  • Inimitable: Is the resource difficult to imitate?
  • Organized: Is the organization organized to capture value?

SWOT Analysis

SWOT is:
  • A key technique for presenting strategic analysis results.
  • A platform for formulating future strategy.
Internal vs. External Analysis
  • Strengths and Weaknesses: Internal analysis of the organization.
  • Opportunities and Threats: Analysis of the external environment.
Control is an important differentiator between internal and external environments.
  • Managers can control the internal environment through decisions.
  • Managers cannot control the external environment.
SWOT Actions
  • Strengths: Build or protect them.
  • Weaknesses: Address them to become strengths or eliminate them.
  • Opportunities: Position the organization to take advantage of them.
  • Threats: Remove them, understand them, and protect the organization from their impacts.