Week 4 Tutorial Part I - 1

1.  What are the characteristics of resources that enable competitive advantage?





 





For a resource to be valuable, it must be either rare, hard to imitate or not easily substitutable. Often called empirical indicators, these three characteristic of resources enable a firm to implement strategies that improve its efficiency and effectiveness to lead to a sustainable competitive advantage. The more a resource is rare and non-substitutable, the stronger a firm’s competitive advantage will be and the longer it will last.

  A resource is valuable to the extent that it helps a firm create strategies that capitalize on opportunities and ward off threats. Southwest Airlines’ culture fits this standard well. Most airlines struggle to be profitable, but Southwest makes money virtually every year. One key reason is a legendary organizational culture that inspires employees to do their very best. This culture is also rare in that strikes, layoffs, and poor morale are common within the airline industry.



 Competitors have a hard time duplicating resources that are  difficult to imitate. Some difficult to imitate resources are protected by various legal means, including trademarks, patents, and copyrights. Other resources are hard to copy because they evolve over time and they reflect unique aspects of the firm. Southwest’s culture arose from its very humble beginnings. The airline had so little money that at times it had to temporarily “borrow” luggage carts from other airlines and put magnets with the Southwest logo on top of the rivals’ logo. Southwest is a “rags to riches” story that has evolved across several decades. Other airlines could not replicate Southwest’s culture, regardless of how hard they might try, because of Southwest’s unusual history.