Leya Resources & Capabilities - PowerPoint Presentation

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Leya

Resources &

Capabilities

Learning Objectives

Develop a strategy for accessing the key resources and capabilities needed to launch the business idea

Appreciate the importance of public relations and entrepreneurial stakeholder networks to a small business

Resources &

Capabilities?

Resources are inputs into the production process…[they] include:Capital equipment

Skills of individual employeesPatentsBrand namesFinanceOn

their own, few resources are productive. Productive activity requires the cooperation and coordination of teams of resourcesA capability is the capacity for a team of resources to perform some task or activity (Grant, 1991: 118-19)

Discussion

Questions

Why do you think resources and capacities are important to a business?In additions to resources and capabilities, what other factors do you think will create competitive advantage of a new venture?

Resource Based View (RBV)

RBV is an approach to achieving competitive advantage that emerged in 1980s and 1990s, after the major works published by

Wernerfelt, B. (“The Resource-Based View of the Firm”), Prahalad and Hamel (“The Core Competence of The Corporation”), Barney, J. (“Firm resources and sustained competitive advantage”) and others.

The supporters of this view argue that organizations should look inside the company to find the sources of competitive advantage instead of looking at competitive environment for it.Francis & Bessant

(2005)

VRIO Analysis

A

strategic internal analysis tool designed to reflect on how a business creates a competitive advantage.Analyses and reviews the resources and capabilities of a firm

A framework which focuses on 4 key questionsValueRarityImitabilityOrganization

VRIO Resources

that

Creates Competitive Advantage

Resource Based View

VRIO ResourcesCompetitive Advantage

Tangible

Intangible

Heterogeneous

Immobile

Relies on resources

That must be

And have VRIO attributes to become

That provide

Resources 1

Tangible assets are physical things. Land, buildings, machinery, equipment and capital – all these assets are tangible. Physical resources can easily be bought in the market so they confer little advantage to the companies in the long run because rivals can soon acquire the identical

assetsIntangible assets are everything else that has no physical presence but can still be owned by the company. Brand reputation, trademarks, intellectual property are all intangible assets. Unlike physical resources, brand reputation is built over a long time and is something that other companies cannot buy from the market. Intangible resources usually stay within a company and are the main source of sustainable competitive

advantage

Resources 2

Heterogeneous. The first assumption is that skills, capabilities and other resources that organizations possess differ from one company to another. RBV assumes that companies achieve competitive advantage by using their different bundles of

resourcesImmobile. The second assumption of RBV is that resources are not mobile and do not move from company to company, at least in the short-run. Due to this immobility, companies cannot replicate rivals’ resources and implement the same strategies. Intangible resources, such as brand equity, processes, knowledge or intellectual property are usually

immobile

VIRO Questions

Question of

Imitability - A company that has valuable and rare resource can achieve at least temporary competitive advantage. However, the resource must also be costly to imitate or to substitute for a rival, if a company wants to achieve sustained competitive advantage

Question of Organization - The resources itself do not confer any advantage for a company if it’s not organized to capture the value from them. Only the firm that is capable to exploit the valuable, rare and imitable resources can achieve sustained competitive advantage

VIRO Questions

Question of

Value - Resources are valuable if they help organizations to increase the value offered to the customers. This is done by increasing differentiation or/and decreasing the costs of the production. The resources that cannot meet this condition, lead to competitive disadvantage

Question of Rarity - Resources that can only be acquired by one or few companies are considered rare. When more than few companies have the same resource or capability, it results in competitive parity

VRIO & Competitive Advantage

Competitive disadvantage

Competitive parity

Temporary competitive advantage

Temporary competitive advantage

No

No

No

No

Case

Study: LEYA

LEYA is an Internet startup company established in the end of 2015, focusing on offering English teaching using a shared economy business model. Children from the same neighborhood form one class, and teachers provide on site lecturing. In this way, it saves parents’ time and reduces

cost The company’s founders are an international team , including two founders who are foreigners, and talented coworkers from XiaoMi, IBM, and Oracle

Case

Study: Leya

In their own words:we came together to do something meaningful for society. I believe that it is the value we share as a team that inspires everybody to make the effort. Hence, finding the people with similar values is

vitalIn the beginning, I was very clear of my business goal. This requires deep thinking before starting the business, for example, what do you want and how do you reach your goal. You have to think of the resources you need, and what kind of partners to help you achieve the goal. Setting the goal is the first step in recognizing the required resources. Since I started the business, based on such a role, together with my previous experience, I was very clear of our business goal and the indispensable resources to achieve the

goalLEYA connects teachers and students. We are an Internet firm, but we base our core competency on innovative organizational form

Pre-Video

Discussion

What resources are needed for a new business like Leya? How do you think the company can pool unique resources to create its unique competitiveness?

Video

Embed/show video

Case Study Discussion

Questions

Map the LEYA case onto the VRIO FrameworkWhat are the tangible and intangible resources that the company has?Do you think their resources are rare and valuable?How has Sky, the Founder, described the process of securing resources?

What other resources and capabilities are needed for Leya to achieve their competitive positions in the market?

References

Rothaermel

, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin: New York. p. 5Barney, J. B. (1991). Firm Resources and Sustained Competitive Advantage.

Journal of Management, Vol. 17, pp.99–120.