COMPETING ON RESOURCES - STRATEGY IN THE 1990S

How do you create and sustain a profitable strategy? Many of the approaches to strategy that have been championed in the past decade have focused the attention of managers inward, urging them to build a unique set of resources and capabilities. In practice, however, notions like core competence have too often become a ''feel good'' exercise that no one fails. The authors explain how a company's resources drive its performance in a dynamic competitive environment, and they propose a new framework that moves strategic thinking forward in two ways: (1) by laying out a pragmatic and rigorous set of market tests to determine whether a company's resources are truly valuable enough to serve as the basis for strategy; and (2) by integrating this market view of capabilities with earlier insights about competition and industry structure. Where a company chooses to play will determine its profitability as much as its resources. The authors explain in clear managerial terms why some competitors are more profitable than others, how to put the idea of core competence into practice and how to develop diversification strategies that make sense. Case examples such as Disney, Cooper, Sharp, and Newell illustrate the power of resource-based strategies. The authors show how these organizations have been able to use corporate resources to establish and maintain competitive advantage at the business-unit level, and also how they have benefited from the attractiveness of the markets in which they have chosen to compete.