4 Criteria

• The Four Criteria of Sustainable Competitive Advantage

  V Valuable

  R Rare

  I Costly to Imitate

  N Nonsubstitutable
• Although every core competence is a capability, not every capability is a core competence.
• A sustainable competitive advantage exists only when competitors are unable to duplicate the benefits of a firm’s strategy or when they lack the resources to attempt imitation.
• For some period of time, the firm may have a core competence by using capabilities that are valuable and rare, but imitable.
• Four Criteria of Sustainable Competitive Advantage

  • help a firm neutralize threats or exploit opportunities

  valuable
• Four Criteria of Sustainable Competitive Advantage

  • are not possessed by many other

  rare
• Four Criteria of Sustainable Competitive Advantage

  • Historical: Unique and valuable organizational culture or brand name
  • Ambiguous cause: Causes and uses of a competence are unclear
  • Social complexity: Interpersonal relationship, trust, and friendship among managers, suppliers, and customers


  costly to imitate
• Four Criteria of Sustainable Competitive Advantage

  • no strategic equivalent


  nonsubstitutable
• Valuable but common, that is not rare, capabilities are sources of competitive parity.
• Nonsubstitutable capabilities are capabilities that do not have strategic equivalents.
• There must be no strategically equivalent valuable resources that are themselves either not rare or imitable.


  Nonsubstitutable
• Two valuable firm resources are strategically equivalent when they each can be separately exploited to implement the same strategies.