Resource-based view of the firm

According to the resource-based view model, a firm's ability to gain a competitive advantage is entirely dependent on its internal rather than external environment. Since everyone's external environment is the same. It is focused on the internal firm and believes that competitive advantage is obtained through using internal company resources and skills rather than external pressures. According to the resource-based concept, businesses rely on both tangible and intangible resources that are diverse and immovable. In terms of giving a competitive advantage, a firm's resources also should include specific characteristics. Those characteristics are valuable, rare, inimitable, and non-substitutable. Land, buildings, machines, and capital are examples of tangible resources that we can see and touch. Intangible resources are not visible or touchable. These are process expertise, as well as skills, competencies, and understand exactly. Intangible assets take years to create and are hard to obtain on the open market. The primary source of competitive advantage is intellectual knowledge. Two major assumptions drive the resource-based view. They are characterized by heterogeneity and immobility. The concept that resources are heterogeneous implies that resources vary from one business to the next, but also that companies in the same industry facing the same external influences might yet have variations in internal resources, resulting in differences in firm performance. For instance, Nike and Adidas compete in the sneaker industry and have the same industry structure. Nonetheless, the firms' internal resources are different, which explains their performance differences. The notion that resources are immovable essentially means that in the short term, resources cannot readily transfer from one organization to another. Competitors can't copy their rivals' resources or strategies since they're immobile. Many firms, for example, would like to have Nike's innovation capability, but developing such a strategic resource takes a long time and money, and it cannot be replicated rapidly. It doesn't move. According to resource-based view model, in order to get a competitive advantage, resources must have extremely specific features. Resources must be valuable, rare, inimitable, and non- substitutable. Resources are useful if they assist a firm in lowering costs, increasing distinction or combining cost and distinction qualities in a way that benefits customers. Resources must also be rare, which means they cannot be readily available to rivals. If everyone accesses a resource, it will be unable to create differential company performance and competitive advantage. In addition, resources must be inimitable, meaning they must be difficult or expensive to replicate and deploy so that competitors cannot quickly copy and apply your strategic approach. Resources must also be non-substitutable, meaning they cannot be replaced by readily accessible resources or, at the very least, finding a

substitutable resource must be costly for a competitor. Resources must be valuable, rare, inimitable, and non-substitutable in order to be useful to gain a competitive advantage. When organizations apply a value-creating strategy which their competitors don't, they get a competitive advantage. In comparison to competitors in the same industry, it results in higher performance.