IO & Resource Based Model - SM

8/13/2019 IO & Resource Based Model - SM

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I/O Model Focus

Strengths

Weaknesses

Organizational

analysis

Opportunities

Threats

Environmental

analysis


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I/O Model: Above-Average Returns

Strategy dictated bythe externalenvironment of thefirm (whatopportunities exist inthese environments?)

Firm develops internalskills required by

external environment(what can the firm doabout theopportunities?)

External Environments

GeneralEnvironment

Outside-in


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The I/O Model of

Above-Average Returns

The External

Environment

1. Study the externalenvironment, especiallythe industry

environment.

The general environmentThe industry environmentThe competitor

environment


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An Attractive

Industry2. Locate an attractive

industry with a highpotential for above-

average returns.

An industry whosestructural characteristicssuggest above-averagereturns

The External

Environment

The I/O Model of



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3. Identify the strategycalled for by theattractive industry to

earn above-averagereturns.

Selection of a strategylinked with above-average returns in aparticular industry

The External

Environment

An Attractive

Industry

StrategyFormulation

The I/O Model of



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Assets and Skills

4. Develop or acquireassets and skillsneeded to implement

the strategy.

Assets and skillsrequired to implementa chosen strategy

The External

Environment

An Attractive

Industry

StrategyFormulation

The I/O Model of



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Strategy

Implementation

Selection of strategicactions linked witheffectiveimplementation of thechosen strategy

The External

Environment

An Attractive

Industry

StrategyFormulation

Assets and Skills

5. Use the firms strengths(its developed oracquired assets and

skills) to implement thestrategy.

The I/O Model of



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Superior Returns

The External

Environment

An Attractive

Industry

StrategyFormulation

Assets and Skills

Strategy

Implementation

Superior returns: Earningof above-average returns

The I/O Model of



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Resource-Based Model Focus

Strengths

Weaknesses

Organizational

analysis

Opportunities

Threats

Environmental

analysis


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Resource-Based Model Each organization is a collection of unique resources

and capabilities that provides the basis for itsstrategy

Capabilities evolve and must be manageddynamically (acquired and/or developed)

Differences in firms performances are due primarilyto their unique resources and capabilities ratherthan structural characteristics of the industry


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Resource-Based Model contdStrategy dictated by the firmsunique resources andcapabilities

Find an environment in which

to exploit these assets (whereare the best opportunities?)

Differences in firmsperformances are dueprimarily to their uniqueresources and capabilitiesrather than structuralcharacteristics of the industry

Firms Resources

THE FIRM

Inside-out


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Criteria for Resources and Capabilities

That Become Core Competencies

Core

Competencies

Valuable Rare

Costly to ImitateNonsubstitutable

Allow the firm to exploitopportunities or neutralizethreats in its externalenvironment

Possessed by few, if any,current and potentialcompetitors

When other firms cannot obtain them or mustobtain them at a much higher cost

The firm is organized to obtain the

full benefits of the resources


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Resources

1. Identify the firmsresources. Study itsstrengths and

weaknesses comparedwith those ofcompetitors.

Inputs into a firmsproduction process

The RBV Model of



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Capability 2. Determine the firmscapabilities. What do thecapabilities allow the firm

to do better than itscompetitors.

Capacity of an integratedset of resources tointegratively perform atask or activity

Resources

The RBV Model of



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3. Determine the potentialof the firms resourcesand capabilities in terms

of a competitiveadvantage.

Ability of a firm tooutperform its rivals

CompetitiveAdvantage

Capability

Resources

The RBV Model of



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An Attractive

Industry

4. Locate an attractiveindustry.

An industry withopportunities that canbe exploited by thefirms resources andcapabilities


Capability

Resources

The RBV Model of



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StrategyImplementation

Strategic actions takento earn above-averagereturns

An Attractive

Industry


Capability

Resources

5. Select a strategy thatbest allow the firm toutilize its resources and

capabilities relative toopportunities in theexternal environment.

The RBV Model of



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Superior Returns

Superior returns: Earningof above-average returns

StrategyImplementation

An Attractive

Industry


Capability

Resources

The RBV Model of



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Superior Returns

Strategy

Implementation

An Attractive

Industry

Competitive

Advantage

Capability

Resources

The RBV Model

Superior Returns

The External

Environment

An Attractive

Industry

Strategy

Formulation

Assets and Skills

Strategy

Implementation

The I/O Model


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SWOT Analysis

Strengths

Weaknesses

Organizational

analysis

Opportunities

Threats

Environmental

analysis

Framework: RBV Model Framework: I/O Model

IO & Resource Based Model - SM

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