The Resource-Based Model
of Above-Average Returns
Resources
Physical, human, and
organizational capital
(tangible and intangible)
Capability
An integrated
set of resources
Core
competence
A source of
competitive
advantage
Resource-Based Model Assumptions
1. Firms acquire different resources.
2. Firms develop unique capabilities based on
how they combine and use resources.
3. Resources and certain capabilities are not
highly mobile across firms.
4. Differences in resources and capabilities are
the bases of competitive advantage and a
firm’s performance rather than its industry’s
structural characteristics.
Resources As Core Competencies
Costly to imitate
Rare
Nonsubstitutable
Valuable
How resources
become core
competencies
The Resource-Based Model of
Above-Average Returns
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Strategic Decision Making
Industry organization
(I/O) model
Resource-based
model
Competitive
strategy
decision
Vision Statement
•A Successful Vision:
Mission Statement
•An Effective Mission:
Stakeholders
Are affected by the strategic
outcomes achieved by the firm
Can affect development of the
firm’s vision and mission
Can have enforceable claims
on the firm’s performance
Primary
stakeholders
(individuals,
groups and
organizations)
Classification of Stakeholders
Capital market
stakeholders
Product market
stakeholders
Organizational
stakeholders
Categories of
stakeholders
The Three Stakeholder Groups
Capital Market Stakeholders
Preservation
of investment
Influence
Enhanced wealth
Risk/return
Conflicting
expectations of
shareholders
and lenders
Product Market Stakeholders
CustomersSuppliers Host
communities Unions
Types of product
market stakeholders
Organizational Stakeholders
Organizational
culture and
ethical work
environment
Education
and skills of
employees
Strategic goals
and global
standards
International
assignments
Responsibilities of strategic leaders for development
and effective use of the firm’s human capital
The Work of Effective Strategic Leaders
•Strategic Leaders:
The Strategic Management Process:
The ASP Process