Main characteristics of the resource-based approach, Financial Management

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Z Company is very successful as market leader in digital media products where it has demonstrated its ability to innovate in new product development and design at a very fast pace, creating new products that its customers had not yet imagined.  At a press launch for its latest product, the Chief Executive was asked about the company's impressive performance in recent years. She responded by saying that the company is committed to a resource-based approach to strategic development, with a desire to challenge itself to constantly stretch its capabilities.     

Discuss the main characteristics of the resource-based approach to strategic development that the Chief Executive of Z Company referred to at the press launch.

The RBV is based on the fundamental principle that competitive benefit is derived from some unique assets or competences possessed by a company. This takes an inside-out approach to strategy as it is based on harnessing the internal capabilities of the company to achieve sustainable competitive benefit. This is in contrast to the more traditional positioning approach which views the external environment as the critical factor in determining an organisation's strategy. The strategic choices when adopting the RBV are not dictated by the constraints of the external environment but influenced more by explaining how the organisation can best stretch its core competences relative to the opportunities in the outside environment.  

 


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