Resource Based View

A Resource Based View is a Strategy method that focuses on the actual resources of a company.

 

Rather that studying external factors, trends or  deficiencies, this method highlights what a company has, its Resources, and defines an action framework based on it.

• While other Strategy tools analyze other competitors, the market… This Tools proposes a more “introspective” approach.

 

This framework can be developed to:

• Define a Product Strategy.
• Define a Global Strategy.
• Re-orientate the Strategy of a Company.
• etc.

 

Since this method focuses on internal factors, it is recommended to develop it in conjunction with other Strategy methods that use broader approaches.

 

* If you are not sure how to analyze a company’s Resources, visit our “Resources and Capabilities” Page.

By Focusing on the actual Resources a Company has, the resulting potential strategies tend to be:

• More coherent.
• Easier to develop.
• More realistic.

 

That is because, generally, when defining  strategies, lots of professionals end up focusing on what the company should have instead of what it actually has.

 

On the other hand, when you develop a Resource Based View (or RBV) you are “forced” to stick to your current Resources and picture a strategy based on them.

Resource Based View Scheme.

 

A Resource Based View could be “simplified” as:

• Before studying what other competitors have or what you think you should have to be successful… Let’s take a look at what you have and what you can offer.

 

You will understand it better with one curious example:

 

Sylvester Stallone is one of the most successful Hollywood actors alive.

• He has starred in some of the most iconic films of the 20th century.
• Moreover, he has written, produced and directed lots of successful films.

 

Maybe, he is not as good actor as Jack Nicholson is, but he knows what he is good at.

 

He has focused on movies he knew people would like.

• Rocky.
• The Expendables.
• Rambo.
• Demolition man (I personally love this movie).
• etc.

And, in these type of movies, he is the best.

 

He uses his Resources in a very successful way.

• That is why his net worth is around $500 million.

 

Maybe, he is not the best actor ever, but… If you want to have a good time: buy some beers, order a pizza, make some popcorn… and watch a Sysvester Stallone film.

In this example, you can appreciate how important and intuitive this analysis is.

 

Then, why should you worry about it?

Because people tend to to look for silver when they already have gold.

 

It is something psychological:

• If you had the solution to your problem in front of you and you didn’t realize… Then you would be ashamed.

On the other hand, if the solution is “out there”, then, you’re not to blame.

 

 

That is why this method is intuitive but not always applied.

Because we all tend to think that our solutions are out there.

• And generally, the most stable, coherent, realistic and plausible solutions are always “in front of us”.

As it happens with other “intuitive” methods, it sounds more obvious than it actually is.

 

But… when should you use this Resource Based View, or RBV method?

Whenever you have to define a Strategy.

 

As we mentioned before, you should use this method as a complementary tool to other Strategy methods.

Such as:

• PESTEL Analysis.
• Porter 5 Forces.
• VRIO analysis.
• GE McKinsey matrix.
• BGC matrix.
• etc…

* We recommend you to visit our different pages, where we talk about these interesting and useful tools.

Now, in order you to understand better this Strategy tool, we’ll share some real examples of companies that used the Resource Based View (or RBV) method successfully:

 

We’re not camera experts (in fact, we only know how to use cheap digital cameras).

But we know one thing: If you wanted to buy the best possible camera , you should think of a Leica.

 

Leica was founded in 1869, in Germany.

Throughout its history, Leica has seen many technological changes that have left many camera companies behind.

 

How could they survive?

• And more important… How can they charge $5,000 for on of their cameras and make people go crazy for them?

 

When digital cameras appeared, Leica had 2 main alternatives:

• 1. Start developing new digital cameras, investing in completely new technologies.
• 2. Stick to what they were good at: High quality traditional cameras and lenses.

They opted for the second option.

 

The result?

Leica camera and Lens example.

 

Currently, Leica is synonym of excellence and extremely high quality cameras.

• Now, they also offer digital cameras, but always maintaining the highest quality standards.

 

They used their Resources, and improved (even more) their reputation… and profits.

 

Netflix had almost monopolized the Video-streaming content.

They were the firsts in developing a viable and successful movie (and series) streaming platform.

• That is Netflix’s main Resource.

 

At some point, Disney thought:

• “These streaming platforms (also Amazon prime, HBO…) need attractive “content” to engage their users and, we have some of the best and more engaging content in the world… What if we invest in acquiring their streaming-platform Resource and start our own platform?”

 

They combined both strategies:

• Acquire an external Resource.
  • A movie-streaming platform.
• Use their own Resources.
  • All their content.

 

The result?

• A complete success.

 

Ducati started manufacturing motorcycles in 1953.

 

And what happened 10 to 15 years later?

• The European market was flooded with cheap and efficient motorcycles from Japan.

 

The Japanese were manufacturing strong, cheap and affordable products (not just motorcycles) and lots of Western companies went bankrupt.

The companies manufacturing them were very big conglomerates (the famous Zaibatsu) and, due to their economies of scale, their costs were extremely competitive (reduced).

 

What did Ducati do?

They had 2 options:

• 1. Reduce their costs and try to compete with the Japanese manufacturers.
• 2. Focus on Design and Quality, developing a more exclusive product.

Again, they opted for the second option.

 

The result is also well known.

 

Maybe, Ducati doesn’t sell as many motorbikes as Yamaha does, but their reputation and “desirability” are higher… and so are their profits.

• In fact, Ducati’s profit margin  is 7% and Yamaha’s 5.2% according to their public Income Statements.

Before looking for solutions “outside home” you should first check what Resources you actually have.

• That is what the Resource Based Views is all about.

 

This method suggests you to analyze your actual Resources and base your Strategic decisions on them.

 

Since this method just focuses only on internal Resources, it is recommended to complement it with other Strategy methods.