Paper 03: Strategic Management

Module 9: Resource Based View And Internal Analysis

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Co-Principal Investigator Prof YoginderVerma

Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Paper Coordinator Dr. Anil Gupta

Senior Assistant Professor
University of Jammu, Jammu 180006.

Content Writer Prof Alka Sharma

The Business School
University of Jammu, Jammu.

Strategic Management
Management Resource Based View And Internal Analysis
 ITEM DESCRIPTION OF MODULE

Subject Name MANAGEMENT

Paper Name STRATEGIC MANAGEMENT

Module Name/ Title Resource Based View and Internal Analysis

Module Id 9

Pre-requisites Basic understanding of Management and its functions

Objectives Understand the Internal Analysis of an Organization

Keywords Internal Analysis, VIRO, Value Chain, Organizational Profile

QUADRANT - I

Module 9 : Resource Based View and Internal Analysis

1. Learning Outcomes
2. Organization’s Internal Analysis
3. VIRO Framework
4. Value Chain Analysis
5. Quantitative Analysis
6. Qualitative Analysis
7. Comparative Analysis
8. Comprehensive Analysis
9. Structuring the Organizational Profile
10. Summary

Strategic Management
Management Resource Based View And Internal Analysis
 1. Learning Outcomes
After reading this you will be able to:
 Understand the resource based view
 Explain VRIO framework
 Describe the Value Chain Analysis
 Distinguish between the Quantitative and Qualitative analysis
 Define comparative analysis
 Understand comprehensive analysis
 Understand the Organisational profile structure

2. Organization’s Internal Analysis

"The resource based view (RBV) is a model that views resources as a key to company's better
performance. RBV is a way to deal with accomplishing competitive advantage and it developed in
1980s and 1990s, after the significant works distributed by Wernerfelt, B. ("The Resource-Based View
of the Firm"), Prahalad and Hamel ("The Core Competence of The Corporation"), Barney, J. ("Firm
assets and sustained competitive advantage ") and others. The supporters of this perspective propose
that as opposed to taking a gander at aggressive environment associations ought to peer inside the
organization itself to discover the sources of competitive advantage.
The accompanying model clarifies RBV and underlines the key purposes of it.
The resource based view (RBV) as a premise for the competitive advantage of a firm lies basically in
the utilization of a bundle of valuable tangible or intangible resources at the firm's disposal. To change
a short-run competitive advantage into a maintained competitive advantage, the assets ought to be
heterogeneous and not splendidly versatile. Successfully, this interprets into important assets that are

Strategic Management
Management Resource Based View And Internal Analysis
 neither splendidly imitable nor substitutable without great effort.
RBV needs to continue along two parallel and interconnected courses:
 Value added – investigates how the association takes merchandise from its supplier and
transforms them into completed products.
 Sustainable competitive advantage – inspects the uncommon assets that empower the enable the
organisation to compete.
The basic guideline of RBV's is that organizations contrast in essential routes as every firm has an one
of a kind a unique “bundle” of resources – tangible and intangible assets and organisational capabilities
to make use of those assets. Every firm creates abilities from these assets and these in the long run turn
into the resources of the company's competitive advantage.
7 components of Resources Based Sustainable Competitive Advantage
When administrators start to distinguish their company's assets, they confront the test of figuring out
which of those assets represent strengths and weaknesses – which resources generate core
competencies that are sources of sustained competitive advantage.
RBV has tended to this by setting seven key components that figure out what constitutes a profitable
resource:
1. Acquired resources
2. Innovative capability
3. Being truly competitive
4. Sustainability
5. Appropriability
6. Durability
7. Imitability

3. VRIO Framework
Keeping in mind the end goal to prompt a feasible competitive advantage an asset ought to be
Valuable, Rare, Inimitable (counting non-substitutable), and Organized. This VRIO structure is the
establishment for internal analysis.
Profitable: An asset is significant on the off chance that it offers the association some assistance with
meeting an external threat or exploit an opportunity. While it may not offer the firm some assistance
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 with outperforming its rivals, it can in any case be marked a quality. Regular competitive foundations
of firms are efficiency, quality, customer responsiveness, and innovation. On the off chance that an
asset achieves any of these four things then it is important.
Rare: A resource is rare simply if it is not widely possessed by other competitors. Of the criteria this is
probably the easiest to judge. For example, Coke's brand name is valuable but most of Coke's
competitors (Pepsi, 7 Up, RC) also have widely recognized brand names as well, making it not that
rare. Of course, Coke’s brand may be the most recognized, but that makes it more valuable not more
rare in this case.
Inimitable: An asset is matchless and non-substitutable on the off chance that it is troublesome for
another firm to get it or a substitute something else in its place. This is most likely the hardest criteria
to look at in light of the fact that sufficiently given time and cash ANY asset can be imitated.
Consequently, one approach to consider this is to look at to what extent you think it will take for
competitors to mirror or substitute something else for that asset and contrast it with the helpful
existence of the item. By and large, intangible resources or capabilities, like corporate culture or
reputation, are difficult to impersonate and in this manner inimitable.
Organized: An asset is sorted out if the firm can really utilize it. For the most part, organisation is
every now and again ignored by system in light of the fact that it regularly manages the internal
workings of firm administration. The uplifting news is that seldom are firms not composed to misuse
their significant assets.
VRIO - STEPS
•Identify firm’s assets Strengths and Weaknesses
•Combine firm’s quality into particular capacities
• Appraise-profit potential, sustainable competitive advantage, ability to convert it to a profitable
proposition
•Select strategy -firm’s resources & capability relative to external opportunity
•Identify resource gaps and invest in upgrading weaknesses
4. Value Chain Analysis
The value chain depicts the classifications of exercises inside and around an organisation, which
together create a product or service. The idea was produced in connection to competitive strategy by
Michael Porter.
VCA takes a procedure perspective where it partitions the business into sets of exercises that happen
inside of the business, beginning with the inputs a firm gets and completing with the company's items

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Management Resource Based View And Internal Analysis
 and after sales services to clients. VCA permits supervisors to better recognize the firm’s strengths and
weaknesses by taking a gander at the business as a procedure – – a chain of activities.
VCA comprises of 5 essential exercises i.e. inbound logistics, operations, outbound logistics,
marketing and sales, service. These are linked to 4 support activities i.e. procurement, technology
development, HRM and firm’s infrastructure. All exercises would acquire cost. The distinction
between the aggregate expense and the offering cost in the edge.
Primary activitiesare specifically worried with the creation or conveyance of a product or service. For
instance, for a manufacturing business:
•Inbound logistics are exercises worried with getting, putting away and circulating inputs to the
product or service including materials handling, stock control, transport, and so forth. Exercises, for
example, materials handling, warehousing, and stock control, used to get store, and disperse inputs to a
product.
•Operations change these inputs into the final product or service: machining, bundling, get together,
and testing, and so on. Machining, bundling, get together, and gear support are cases of operations
exercises.
•Outbound logistics gather, store and disperse the product to clients, for instance warehousing,
materials handling, distribution, and so forth. Exercises included with gathering, putting away, and
physically conveying the final product to clients.
• Marketing and salesgive the methods whereby buyers/clients are made mindful of the item or
benefit and can buy it. This incorporates deals organization, publicizing and offering. To successfully
market and offer items, develop advertising and promotional campaigns, select appropriate distribution
channels, and select, develop, and support their sales force.
•Service includes those activities that enhance or maintain the value of a product or service, such as
installation, repair, training and spares. Firms engage in a range of service- related activities, including
installation, repair, training, and adjustment.
Support activitiesenhance the viability or proficiency of essential exercises:
•Procurement. The procedures that happen in numerous parts of the association for securing the
different asset inputs to the essential exercises.
•Technology development. All quality exercises have an 'innovation', regardless of the possibility that
it is simply know-how. Advances may be concerned straightforwardly with an item (for instance,
R&D, item plan) or with procedures (for instance, process improvement) or with a specific asset (for
instance, crude materials upgrades).

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Management Resource Based View And Internal Analysis
 • Human resource management. It is concerned with those activities involved in recruiting,
managing, training, developing and rewarding people within the organization.
•Infrastructure. The formal frameworks of arranging, account, quality control, data administration,
and the structures and schedules that are a piece of an association's way of life.
The value chain can help with the examination of the vital position of an organization in diverse ways.
As non-specific portrayals of exercises that can offer managers some assistance with understanding if
there is a bunch of exercises giving advantage to clients situated inside of specific territories of the
value chain. The quality anchor additionally prompts managers to consider the role diverse activities
play. For instance, in a nearby family-run sandwich bar, is sandwich making best considered as
"operations" or as 'advertising and sales', given that its reputation and appeal may depend on the social
relations and exchange between the clients and sandwich creators? Apparently it is "operations" if done
badly yet 'advertising and sales' if done well.
The value network
A solitary organization does not attempt the greater part of the quality exercises. There is generally
specialization of part so any one organization is a piece of a more extensive value network.
The value network is the arrangement of between authoritative connections and connections that are
important to make product or service.
Consequently an organization should be clear about what exercises it should embrace itself and which
it ought to outsource. On the other hand, since a great part of the expense and esteem creation will
happen in the supply and dispersion chains, managers need to comprehend this entire procedure and
how they can deal with these linkages and connections to enhance client esteem. For instance, mobile
phone when it reaches the final purchaser is influenced not only by the activities undertaken within the
manufacturing company itself, but also by the quality of components from suppliers and the
performance of the distributors. It is therefore important that managers understand the bases of their
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Management Resource Based View And Internal Analysis
 value network.

5. Quantitative Analysis
A business or budgetary investigation strategy that tries to comprehend conduct by utilizing complex
scientific and factual displaying, estimation and exploration. By allotting a numerical worth to
variables, quantitative examiners attempt to recreate reality scientifically.
Quantitative analysis should be possible for a various reasons, for example, estimation, execution
assessment or valuation of a monetary instrument. It can likewise be utilized to anticipate genuine
occasions, for example, changes in an offer cost.
Quantitative analysis is basically a method for measuring things. Samples of quantitative analysis
incorporate everything from financial ratios such as earnings per share, to something as complicated
as discounted cash flow.

Why use quantitative methodologies?

Quantitative methods for information analysis can be of extraordinary worth to the analyst. The main
benefit is that it provides the means to separate out the large number of confounding factors that often
obscure the main qualitative findings. The main benefit is that it provides the means to separate out the
large number of confounding factors that often obscure the main qualitative findings. Take for
instance, a study whose principle goal is to take a role of non-wood tree products in livelihood
strategies of smallholders. Participatory discussions with a number of focus groups could give rise to a
wealth of qualitative information. But the complex nature of inter-relationships between factors such as
the marketability of the products, distance from the road, access to markets, percent of income derived
from sales, level of women participation, etc., requires some degree of quantification of the data and a
subsequent analysis by quantitative methods.
Once such quantifiable segments of the information are isolated, consideration can be centred around
attributes that are of a more individualistic qualitative nature. Quantitative analytical approaches
additionally permit the reporting of outline results in numerical terms to be given with a predetermined
level of certainty. The utilization of quantitative methods in examining qualitative information can also
lend greater credibility to the research findings by providing the means to quantify the degree of
confidence in the research results.
When are quantitative analysis approaches useful?
Quantitative analysis methodologies are significant just when there is a requirement for information
outline crosswise over numerous reiterations of a participatory procedure, focus group discussions
leading to seasonal calendars, venn diagrams, etc. Information summarization thus suggests that some
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 normal elements do rise crosswise over such reiterations. Along these lines the estimation of a
quantitative analysis emerges when it is conceivable to recognize highlights that happen as often as
possible over the numerous participatory discussions aimed at studying a particular research theme
For instance, assume it is of enthusiasm to find out about individuals people perceptions of what
poverty means for them. It is likely that the narratives that result from discussions across several
communities will demonstrate some frequently occurring answers like experiencing periods of food
shortage, being unable to provide children with a reasonable level of education, not owning a radio,
etc. Such information can be extracted from the narratives and coded. Quantitative methodologies
gives the chance to ponder over this coded data first and afterwards to swing to the staying subjective
segments in the information. These can then be examined all the more effectively, unhindered by the
quantitative parts. Quantitative analysis methodologies are especially useful when the subjective data
has been gathered in some organized way, regardless of the fact that the real data has been inspired
through participatory exchanges and methodologies.

What Are the Different Types of Quantitative Analysis Tools?

Different types of quantitative analysis tools include graphs, linear regressions and hypothesis testing.
These devices give experts measurable techniques for sorting out and looking at information. These
devices are helpful for breaking down study results, recorded information or monetary numbers. They
can likewise be utilized for estimating or deciding the likelihood of a specific occasion happening.
Such quantitative analysis tools require the analyst to have basic mathematical skills and can be done
in most spreadsheet software.
Graphs are a method for outwardly sorting out information with a specific end goal to increase better
knowledge into what the numbers appear and to effortlessly identify designs. These graphs for
quantitative analysis can be found as bars, lines and dots. The most widely recognized kind of chart for
quantitative information is the histogram. A histogram is a visual diagram that is developed by
arranging the data into ranges. For instance, it can be used to create a bar graph to show the number of
sales per month for products in different price ranges
Linear regressions are a popular quantitative analysis tool that is used to determine the relationship
between two sets of related data. If the analyst determines the data to have a strong correlation, the data
can be graphed so that predictions can be made. For example, if there is a strong correlation between
the number of daily Web site visitors and the advertisement revenue, then the analyst can determine
how many visitors per month are needed for the Web site to earn a targeted amount of advertisement
revenue. When needing to make forecasts based on the results of several variables, a multiple
regression analysis can be done through the use of more advanced calculations.

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 Hypothesis testing is used by businesses when determining the probability of an event happening
under specific conditions. It is generally done by collecting customer data from surveys and then using
hypothesis testing quantitative analysis tools to determine the likelihood of a member of the general
population to have the same response or characteristic. The accuracy of hypothesis testing depends
largely on the size of the sample population, randomly selecting from the population, accuracy of the
questions, and errors in collecting the information. This is most commonly used by marketers to test a
new product or gain insight into public opinion about current offerings.

6.Qualitative Analysis
Quantitative analysis uses precise inputs, for example, net revenues, debt ratios, profit products and so
forth. These can be connected to a mechanized model to yield a careful result, for example, the
reasonable estimation of a stock or a forecast for earnings growth.
Qualitative analysis, then again, manages immaterial, inaccurate worries that have a place with the
social and experiential domain as opposed to the scientific one. This methodology relies on upon the
sort of knowledge that machines (presently) need, since things like positive relationship with a brand,
administration reliability, consumer loyalty, customer satisfaction, competitive advantage and cultural
shifts are troublesome, ostensibly unthinkable, to catch with numerical inputs.
Qualitative analysis is securities analysis that uses subjective judgment in light of unquantifiable data,
such as management expertise, industry cycles, strength of research and development, and labor
relations. The two techniques, however, will often be used together in order to examine a company's
operations and evaluate its potential as an investment opportunity.
The thought behind quantitative analysis is to measure things; the thought behind qualitative analysis is
to comprehend things.
A purely qualitative approach is vulnerable to distortion by blind-spots, over-narrativizing and personal
biases. Quantitative measures can act as a check on these tendencies.
There has been a recent move in social science towards multi-method approaches which tend to reject
the narrow analytical paradigms in favour of the breadth of information which the use of more than one
method may provide. In any case, a stage of qualitative research is often a precursor for quantitative
analysis.
7.Comparative Analysis
Qualitative Comparative Analysis (QCA) is a technique, originally developed by Charles Ragin in
1987. It is used for analyzing data sets by listing and counting all the combinations of variables
observed in the data set, and then applying the rules of logical inference to determine which descriptive
inferences or implications the data supports.

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 On account of categorical variables, QCA starts by posting and tallying a wide range of cases which
happen, where every sort of case is characterized by its remarkable mix of estimations of its
autonomous and ward variables. Case in point, if there were four downright variables of interest,
{A,B,C,D}, and A and B were dichotomous, C could tackle five qualities, and D could tackle three,
then there would be 60 conceivable sorts of perceptions controlled by the conceivable mixes of
variables, not all of which would fundamentally happen, all things considered. By checking the
quantity of perceptions that exist for each of the 60 one of a kind mix of variables, QCA can determine
which descriptive inferences or implications are empirically supported by a data set.
In QCA's next step, inferential rationale or boolean variable based math is utilized to disentangle or
lessen the quantity of derivations to the base arrangement of deductions upheld by the information.
This diminished arrangement of deductions is termed the "prime implicants". For instance, if the
presence of conditions A and B is always associated with the presence of a particular value of D,
regardless of the observed value of C, then the value that C takes is irrelevant. Thus, all five inferences
involving A and B and any of the five values of C may be replaced by the single descriptive inference
"(A and B) implies the particular value of D".
The method is utilized as a part of sociology and depends on the parallel rationale of Boolean algebra,
and endeavors to guarantee that every single conceivable mix of variables that can be made over the
cases under scrutiny are considered.

8.Comprehensive Analysis
Comprehensive analysis refers to the complete analysis of every relevant aspect of a company's
financial operations. The objective of such investigation is to give a complete picture of the money
related status of an organization both in the present time and anticipated into what's to come.
Performing a complete examination requires assembling the majority of the data from an organization's
financial reports, including both the most current report and also reports from the past. This data is
utilized to ascertain money related proportions, which are metrics used to measure different aspects of
a company's operations and compare them to similar companies within the same industry.
At the point when investors set out to choose which organizations merit their capital, they regularly do
a thorough examination of the organization's money related data. Along these lines, they can best
choose whether or not an organization is a commendable venture. By the same token, the organizations
themselves may wish to figure out how well their numbers stack up to different rivals in the same
business. A far dissecting so as to reach examination can accomplish these objectives each part of an
organization's money related information.
One essential variable to consider when performing a thorough examination on an organization is that
the outcomes might be as exact as the information which goes into it. This is particularly genuine when
endeavoring to extend an organization's money related status into eventually. Since any future

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 predictions can only be approximations, the data behind those estimates must be extremely precise to
prevent incorrect assumptions.
When the majority of the information is gathered, the next step in a comprehensive analysis is to come
up with financial ratios. These ratios generally take one piece of financial information and divide it into
another piece to come up with a ratio. Ratios can be used to interpret the strength of practically every
important aspect of a company's financial operations, including its profitability, liquidity, debt
levels, cash flow, and so on.
These proportions, be that as it may, have little significance as just crude numbers. Knowing, for
instance, that an organization can pay off all its present obligation and still have 20 percent of the first
measure of its advantages in place doesn't mean a ton without some connection for passing judgment
on it. That is the reason one of the last strides of comprehensive analysis ought to be contrasting these
proportions with the proportions of other money related pioneers inside of the same business. Doing
this examination will give a thought of where the organization is flourishing and what regions need
change.
9. Structuring The Organizational Profile
The Organizational Profile is a preview of an association, the key impacts on how it works, and the key
difficulties it faces. It is the most suitable beginning stage for self-evaluation. It is fundamentally
critical for the accompanying reasons:
•It offers you some assistance with identifying holes in key data and spotlight on key execution
prerequisites and results.
•You can utilize it as a beginning self-evaluation.
The Organizational Profile consists of two items:
 Organizational Description: What are your key organizational characteristics
 Organizational Situation: What is your organization’s strategic situation?

Organizational Description: What are your key organizational characteristics?

Depict you're working environment and your key associations with clients, suppliers, accomplices, and
partners.
a. Organizational Environment: includes
1. Product Offerings
2. Vision and Mission
3. Workforce profile
4. Assets
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 5. Regulatory requirements

b. Organizational Relationships
1. Organizational structure
2. Customers and stakeholders
3. Suppliers and partners
2. Organizational Situation: What is your organization’s strategic situation?
Portray your aggressive surroundings, your key difficulties and focal points, and your framework for
execution change.
a. Competitive Environment
1. Competitive position: What is your aggressive position? What are your relative size and
development in your industry or the business sectors you serve? What number of and what
sorts of contenders do you have?
2. Competitiveness Changes: What key changes, if any, are influencing your aggressive
circumstance, including changes that create opportunities for innovation and collaboration,
as appropriate?
3. Comparative Data: What key sources of similar and focused information are accessible
from inside of your industry? What key sources of near information are accessible from
outside your industry? What restrictions, if any, influence your capacity to get or utilize
these information?

b. Strategic Context
What are your key vital difficulties and points of interest in the zones of business, operations,
societal obligations, and workforce?
c. Performance Improvement System
What are the key elements of your performance improvement system, including your forms
for assessment and change of key authoritative tasks and processes?

10. Summary
 Organization’s Internal Analysis: The resource-based view (RBV) is a model that sees
resources as key to superior firm performance. If a resource exhibits VRIO attributes, the
resource enables the firm to gain and sustain competitive advantage. The resource-based
view (RBV) as a basis for the competitive advantage of a firm lies primarily in the application
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 of a bundle of valuable tangible or intangible resources at the firm's disposal. To transform a
short-run competitive advantage into a sustained competitive advantage requires that these
resources are heterogeneous in nature and not perfectly mobile. Identify the firm’s potential key
resources.
 VRIO : Valuable, Innovation, Rare, Organized
 Value Chain Analysis: The value chain describes the categories of activities within and around
an organisation, which together create a product or service. It attempts to understand how a
business creates customer value by examining the contributions of different activities within the
business to that value. VCA consists of 5 primary activities i.e. inbound logistics, operations,
outbound logistics, marketing and sales, service. These are linked to 4 support activities i.e.
procurement, technology development, HRM and firm’s infrastructure.
 Quantitative Analysis: A business or financial analysis technique that seeks to understand
behaviour by using complex mathematical and statistical modelling, measurement and research.
By assigning a numerical value to variables, quantitative analysts try to replicate reality
mathematically.
 Different Types Of Quantitative Analysis Tools:Different types of quantitative analysis tools
include graphs, linear regressions and hypothesis testing.
 Qualitative Analysis:Qualitative analysis is securities analysis that uses subjective judgment
based on unquantifiable information, such as management expertise, industry cycles, strength
of research and development, and labour relations. People are central to qualitative analysis. A
company's business model and competitive advantage are a key component of qualitative
analysis.
 Comparative Analysis: It is used for analysing data sets by listing and counting all the
combinations of variables observed in the data set, and then applying the rules of logical
inference to determine which descriptive inferences or implications the data supports.
 Comprehensive Analysis:Comprehensive analysis refers to the complete analysis of every
relevant aspect of a company's financial operations. A comprehensive analysis can achieve
these goals by dissecting every aspect of a company's financial data. The goal of such analysis
is to provide a complete picture of the financial status of a company both in the current time
and projected into the future.
 Structuring The Organizational Profile:The Organizational Profile is a snapshot of your
organization, the key influences on how it operates, and the key challenges it faces. It is the
most appropriate starting point for self-assessment. The Organizational Profile consists of two
items: Organizational Description: What are your key organizational characteristics
Organizational Situation: What is your organization’s strategic situation?

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