Question

For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should

a. be hard to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals.
b. be something that a company does internally rather than in collaborative arrangements with outsiders.
c. have the potential for lowering the firm's unit costs.
d. be patentable.
e. be an industry key success factor and occupy a prime position in the company's value chain.

Answer 1

For a company resource to provide competitive advantage, it must be hard to replicate, rare, valuable, and not easily substituted. Examples include patented inventions, practices like predatory pricing, and well-built brand names. These factors serve as barriers to entry and protect the firm from competition.

Step-by-step explanation:

For a particular company resource or capability to have real competitive power and perhaps qualify as a basis for competitive advantage, several characteristics are important. Such a resource should be not only hard to copy and rare but also competitively valuable and not easily replaceable by substitutes. This forms the basis for sustainable competitive advantage as articulated in the resource-based view of the firm. Let's consider some examples:

• A patented invention is an example of a government-enforced barrier to entry, as it legally restricts others from using the invention without permission, thus allowing the holder to maintain a competitive advantage.
• A well-established reputation for slashing prices, such as predatory pricing, can deter new entrants and can be seen as a barrier to entry that is not government-enforced. This competitive action makes the market less attractive to potential rivals.
• A well-respected brand name that has been built up over many years represents a significant asset to a company. It is difficult to replicate quickly and offers a competitive advantage because it influences consumer perception and loyalty.

Barriers to entry, such as economies of scale, control of resources, legal protections, and competitive practices, all play a part in establishing and sustaining a firm's competitive advantage. Intellectual property laws, like patents and trademarks, explicitly protect certain resources, leading to a monopolistic advantage. Absolute advantage and gains from trade are concepts in international economics where countries may benefit from trading based on their efficiencies and productivity. Splitting up the value chain refers to the strategic distribution of production processes across geographic locations to maximize efficiency and effectiveness.