The Formulation of Resource-Based Strategy for Sustainable Excellence

Achieving good performance and gain sustainable competitive advantage is the goal of every company. Companies must have made various efforts to gain a competitive advantage for the benefit of shareholders, employees, and other stakeholders. The most common ways to do is to implement various business strategies.

Has now developed a wide selection of business strategies and functional strategies (marketing, production, human resources, finance, information technology) that supports the business strategy. Various companies even ask for help from consultants to formulate and implement business strategies. Various sophisticated strategies can sometimes be applied to improve the company performance. But not a few companies that are still not managed to get a competitive advantage, although it has implemented various strategies.

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The business strategy is said to be effective if it is able to take advantage of business opportunities with better than competitors. Effective if it can meet the needs and desires of customers very well. Effective if customers prefer us because it can provide higher benefits at a cost or sacrifice lower than competitors. The strategy adopted should be able to take advantage of business opportunities and serve customers in a different way and with better results than its competitors. 

Approaches Resource-Based View (RBV), in many cases lately, stating that the strategy will be effective if formulated and implemented based on the excellence capabilities and resources of the company. The strategy is based on superior capabilities and resources, unique and difficult to imitate will generate a sustainable competitive advantage. This in turn will result in better performance in the long term (Figure 1).

Many companies that have a good strategy but it can not be executed because it is not supported by the appropriate as well as superior capabilities and resources. Capabilities and resources are categorized as superior and unique is that meet the criteria of a valuable (able to give good customer value), rare (rare competitors who have), non immitable (difficult to imitate by competitors), non-substitutable (hard to replace), and organized (organized by the company).

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Figure 1: Resource-based strategy model

Implementation of resource-based strategy begins with identifying key success factors of an industry (Figure 2). This identification can be done with the analysis method according to Porter's five force (the bargaining power of customers, the bargaining power of suppliers, the level of competition, the level of the threat of new entrants, and the level of threat of substitute products) taking into account the characteristics of an industry. From the analysis of five forces can be identified any critical factors in the industry. The ability to overcome the critical factor is the key to success in an industry.

If we try in the palm oil industry, limited arable land, seeds, and the price is determined by the international market is a critical factor. Besides, palm oil plants have characteristics that plants produce for a period of 25 years with productivity is determined by the condition of the seedlings and plant health over the age of 0-3 years (immature). Therefore it can be concluded that the key success factors in the palm oil industry, among others, a fertile land and under the terms of agro-climate, seeds, plant productivity, product quality, cost efficiency, and health immature plants.

Based on the key success factors, it can be identifies key capabilities and resources needed to succeed in each of the key success factors. Associated with the key success factors, the capabilities needed to succeed in the oil palm plantations, among others, the application of technology and crop management, cost control, quality control, and the ability to obtain quality seeds.

The other key resources are conditions, land and farm manager. The next step is to identify the capabilities and resources the company has which unique and superior compared to competitors.

On the other hand we do the analysis of the macro environment, industry, customers, and competition for identifying business opportunities. Having met its strategic opportunities, we begin to match the opportunities which are compatible with superior capabilities and resources of the company.

The next step was to design a strategy to take advantage of the competence and resources to take advantage of business opportunities. More and more capabilities and resources are superior and difficult to imitate, it will be increasingly flexible companies design strategies to gain competitive advantage.

The fewer capabilities and resources are superior and difficult to imitate, it will be increasingly difficult to formulate strategies and gain competitive advantage. One of the main criteria of a good strategy is a strategy that can be implemented because it is supported by featured capabilities and resources and is difficult to imitate

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Figure 2:  Framework of capabilities and resources-based strategy formulation

For example the strategy is difficult to imitate because it is supported by superior capabilities and resources and is difficult to imitate is a cost leadership strategy (cost leadership) run by Walmart. Walmart select and execute that strategy well as supported by the management of logistics and distribution centers which superior and difficult to be imitated by competitors.

Another example of resource-based strategy can be seen from batik Bin House which has a very good reputation in the creative industries. Bin House has a special expertise and hard to duplicate in batik designing and selecting fabric that suits the taste upscale market as well as supported very good batik craftsmen. The advantages of the capabilities and resources perfectly suited to the application of the differentiation strategy to target the upscale market.

*Dr. Triono Saputro - Director of Organization Development Services.