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resource based view of a firm

Introduction

This report is based on the importance of resource based analysis for a business firm. In this report we present the meaning and importance of resource based view with the help of Porter’s expertise in this field. We then apply these concepts to analyze the company Olympus. We identify, analyze and explain its competitive advantage based on resource based analysis.

Olympus History:

Olympus was established on October 12, 1919. It initially specialized in microscope and thermometer businesses. Takeshi Yamashita became an attorney after graduating from Tokyo Imperial University Law School in 1915. After one year of military service, he joined Tokiwa Shokai, a trading company. He brought considerable profit to Tokiwa Shokai through sugar trading. Tokiwa Shokai then compensated his effort by allowing Mr. Yamashita to establish his own firm, Takachiho Seisakusho with Shintaro Terada, a friend from his lawyer days. The objective of Takachiho Seisakusho was to launch domestic production of microscopes.

Mr. Terada was the first Japanese to build microscopes using industrial techniques in the 1910s. A microscope built by Mr.Terada was exhibited at the Taisho Expo held in 1914 and won the bronze prize. Mr. Matsumoto of Iwashiya, a long-established medical equipment firm, financially supported him to produce "M&KATERA" microscopes. This name was created by combining the names of the three people involved in the development of this microscope: Mr.Matsumoto, Mr.Kato, and Mr.Terada.

Mr. Terada had been mainly making thermometers in Hongo, Tokyo. He gained sufficient experience in microscopes through building the M&KATERA model. Mr.Yamashita revealed his dream of building microscopes to Mr.Terada and asked him to come work for Takachiho Seisakusho. The manufacturing equipment of Terada Seisakusho was transferred to Takachiho Seisakusho, and Mr.Terada becomes the chief engineer of the company. (http://www.olympus-global.com/en/corc/history/found/ )

In 2003, the company made a fresh start as Olympus Corporation, to show its willingness to establish a dynamic corporate brand by unifying the corporate name and the well-known brand.

In recent years, Olympus Corporation has focused on "Opto-Digital Technology" as its core competence, technological strengths that competitors cannot easily imitate, to maximize corporate value and to become one of the top optical instrument manufactures. (http://www.olympus-global.com/en/corc/history/about/ )

Vision:

“Your Vision, Our Future”: Technology insights, learning opportunities, awards and reports from customers. (http://www.olympus.ee/corporate/index.htm )

Mission Statement:

We are committed to improve our products and services as well as to increase efficiency, productivity, process quality and safety in all our customer laboratories whilst at the same time driving a reduction in their overall costs.

As a complete solution provider we do not only offer dedicated products for blood grouping, clinical chemistry and immunochemistry but also solutions for pre- and post-analytical workflow improvements by laboratory automation systems and software solutions.

Supporting our customers by developing and sustaining a long-term partnership with them is our utmost mission. (www.olympus-diagnostica.com/diagnostica/3862_3885.htm)

Resource Based View:

First we will understand what the Resource Based View is: "During the 1990s, ideas concerning the role of resources and capabilities as the principal basis for firm strategy and the primary source of profitability coalesced into what has become known as the Resource-based View of the firm." It is the idea that the firm is essentially a pool of resources and capabilities, and that these resources and capabilities are the primary determinants of its strategy and performance. (Grant, 2005; P132-133) The external environment of the firm is highly volatile in today's situation. This results in toughening to decide such strategy which can be implied in changing circumstances. It is quite difficult to implement a constant strategy so it is more advisable to identify the firm's strategy in a way that what a firm is capable of doing, i.e. its capability with its available resources.

(Source: www.ustyleit.com)

Barney suggests that sources of sustained competitive advantage are particular from firm's Valuable, Rare, Imperfectly imitable and Non-Substitutable resources. The resource-based view is a new view of the firm and its usefulness and richness can be applied in a variety of strategy research area. One area is strategic alliance, including using resources-based view to structure research. (Grant, 2005; Barney, 1991)

(Source: www.valuebasedmanagement.net)

Valuable: A resource can only be considered a source of sustainable competitive advantage when it is valuable. Resources are valuable when they let a firm implement strategies that improve its efficiency and effectiveness.

Rare: A valuable firm resources possessed by large numbers of competing firms can not be sources of either a competitive advantage or a sustainable competitive advantage. If other firms have the same resources, then there is nothing stopping them from using the resources in the similar mode, thus eliminating any competitive advantage.

Imperfectly imitable: One of the chief characteristics of a value creating resource because it limits competition. If the resource is imperfectly imitable, then any profit generated from it is more to be expected to be sustainable. A resource that is easily imitative will only produce short-term value.

Non-substitutable: This characteristic draws on Porter's Five Forces Model that is durability, transparency, transferability, replicability, and appropriability. A firm must not have strategically equivalent valuable resources that are themselves either not rare or imitable.

Competitive Advantage, Resources and Capabilities

A firm's competitive advantage evolves from its resources and capabilities existing to the firm. Each organization is a set of unique resources and capabilities that provides the source