An Evaluation of Apple's Competitive Advantage Using the Resource-Based View (Rbv)
Contents
Contents 1
Main Body 2/5
Conclusion 5
References 6/7
Appendices 7
List of Figures
Figure 1: Resource-based model 3
Critically evaluate the resource-based view (RBV) of the firm as a means of explaining the sources and strength of the competitive advantage of Apple.
Apple is an American multinational corporation which designs, manufactures and markets a range of consumer electronics and software products (Apple Inc., 2008). At the end of last fiscal year, Apple’s worldwide annual sales amounted to $32.5 billion, an increase of 35% from 2007 (Apple Inc., 2008). Not surprisingly then, was Apple voted America’s most admired company, also topping the global survey (Fortune, 2008). This kind of achievement speaks volumes. Using the “resource-based view” (RBV) of a firm, we can begin to understand how Apple is able to create and sustain this competitive advantage.
The “resource-based view” (RBV) looks at a firm’s internal strengths in terms of the resources and capabilities it possesses as a means of creating a competitive advantage (Barney, 1991; Wernerfelt, 1984). Contrary to environmental models such as Porter’s (1985) classic five forces model, the RBV assumes that external opportunities and threats are essentially the same for every firm but that the resources they possess differ (Collis, 1991). The concept draws from Penrose’s (1959) work, who introduced the idea that a firm is a unique “collection of productive resources”. The argument is that by formulating a strategy on the basis of these unique resources, a firm is presented with new opportunities that lead to higher returns over longer periods of time (Wernerfelt, 1984). Two basic assumptions underpin the RBV. A firm’s resources and capabilities must be heterogeneous and they must be imperfectly mobile in order to create a sustainable competitive advantage (Barney, 1991; Peteraf, 1993).
A competitive advantage is a “value creating
Contents 1
Main Body 2/5
Conclusion 5
References 6/7
Appendices 7
List of Figures
Figure 1: Resource-based model 3
Critically evaluate the resource-based view (RBV) of the firm as a means of explaining the sources and strength of the competitive advantage of Apple.
Apple is an American multinational corporation which designs, manufactures and markets a range of consumer electronics and software products (Apple Inc., 2008). At the end of last fiscal year, Apple’s worldwide annual sales amounted to $32.5 billion, an increase of 35% from 2007 (Apple Inc., 2008). Not surprisingly then, was Apple voted America’s most admired company, also topping the global survey (Fortune, 2008). This kind of achievement speaks volumes. Using the “resource-based view” (RBV) of a firm, we can begin to understand how Apple is able to create and sustain this competitive advantage.
The “resource-based view” (RBV) looks at a firm’s internal strengths in terms of the resources and capabilities it possesses as a means of creating a competitive advantage (Barney, 1991; Wernerfelt, 1984). Contrary to environmental models such as Porter’s (1985) classic five forces model, the RBV assumes that external opportunities and threats are essentially the same for every firm but that the resources they possess differ (Collis, 1991). The concept draws from Penrose’s (1959) work, who introduced the idea that a firm is a unique “collection of productive resources”. The argument is that by formulating a strategy on the basis of these unique resources, a firm is presented with new opportunities that lead to higher returns over longer periods of time (Wernerfelt, 1984). Two basic assumptions underpin the RBV. A firm’s resources and capabilities must be heterogeneous and they must be imperfectly mobile in order to create a sustainable competitive advantage (Barney, 1991; Peteraf, 1993).
A competitive advantage is a “value creating
References: Apple Inc., September 27, 2008. 2008 10-K Annual Report. Apple Inc. Available from: http://www.apple.com/investor/ [Accessed: 12 November, 2008] Barney, J., 1991 Economist, 2005. The resurrection of Steve Jobs: Face value. USA: Economist Group Business. Available from: http://www.economist.com/people/displaystory.cfm?story_id=4400796 [Accessed 19 November 2008] Fortune, 2008 Grant, R., 1991. The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review, 33 (3), 114-135. Hoopes, D.G., Madsen, T.L Johnson, G., Scholes, K. and Whittington, R., 2004. Exploring Corporate Strategy: Text and Cases. 7th ed. London: Financial Times Prentice Hall. Ketchen, D.J., Hult, T.M. and Slater, S.F., 2007. Toward greater understanding of market orientation and the resource-based view. Strategic Management Journal, 28 (9), 961-964. Newbert, S.L., 2008. Value, Rareness, Competitive Advantage and Performance: A Conceptual-Level Empirical Investigation of the Resource-Based View of the Firm. Strategic Management Journal, 29 (7), 745-768. Penrose, E.T., 1958 Peteraf, M.A., 1993. The Cornerstones of Competitive Advantage: A resource-Based View. Strategic Management Journal, 14 (3), 179-191. Porter, M.E., 1985. Competitive Advantage. New York. Free Press Porter, M.E., 2004 Prahalad, C.K. and Hamel, G., 1990. The Core Competence of the Corporation. Harvard Business Review, 68 (3), 79-91. Priem, R.L. and Butler, J.E., 2001. Is the Resource-Based “View” a Useful Perspective for Strategic Management Research?. Academy of Management Review, 26 (1), 22-40. Wernerfelt, B. 1984. A Resource-based View of the Firm. Strategic Management Journal, 5 (2), 171-180.