Resource-based model figure explanation

• Resource-based model suggests that the strategy the firm chooses should allow it to use its competitive advantages in an attractive industry
• The I/O model is used to identify an attractive industry
• Not all of a firm’s resources and capabilities have the potential to be the foundation for a competitive advantage.
• Resources only have the potential to be the foundation for a competitive advantage when resources and capabilities are valuable, rare, costly to imitate, and non-substitutable.
• Resources are valuable when they allow a firm to take advantage of opportunities or neutralize threats in its external environment.
• Resources are rare when possessed by few, if any, current and potential competitors.
• Resources are costly to imitate when other firms either cannot obtain them or are at a cost disadvantage in obtaining them compared with the firm that already possesses them.
• Resources are non-substitutable when they have no structural equivalents.
• Many resources can either be imitated or substituted over time. Therefore, it is difficult to achieve and sustain a competitive advantage based on resources alone.
• Individual resources are often integrated to produce configurations in order to build capabilities. These capabilities are more likely to have these four attributes. When these four criteria are met, however, resources and capabilities become core competencies.
• both the industry environment and a firm’s internal assets affect that firm’s

  performance over time
• to form a vision and mission, and subsequently to select one or more strategies and determine how to implement them, firms use both the I/O and resource-based models