Managing Capabilities Essay Example | Topics and Well Written Essays - 3000 words

Managing Capabilities - Essay Example In the first part, the study will try to identify the concept of resource based view, and importance of capabilities for the sustainable competitive advantage of an organization. This will help in developing theoretical background of this paper. Resources capabilities of Walmart will be critically analyzed and the strategies will also be evaluated. In the last part, the study will analyze strategic capabilities of Walmart in terms of value chain analysis and VRIN and Ratio Analysis. Organizational Resource and Capabilities Seminal research has suggested that, competitive advantage should be measurable for companies otherwise it will be hard for companies to understand the scalability of the advantage that can help them move ahead in competition (Porter, 1980). According to Porter (1985 and 1991), companies can achieve competitive advantage with the help of cost leadership, product differentiation and by catering to demands of customers in focused manner. In order to establish a compe titive advantage every organizations plans and implements strategies. The aim is to outperform their competitors and gain a higher profit within the industry. A superior competitive advantage can be achieved by creating more values, which in turn depends on the resources and organizational capabilities to utilize these resources (Besanko et al, 2003). Sustainability of the organizational strategies is very essential for long term growth (Cullen and Parboteeah, 2005). Sustainability is critical and it implies that the strategies are not easily attacked or neutralized by the competitors (Aaker, 1989). It also ensures a persistent competitive advantage even if potential entrants or competitors disrupt by imitating or neutralizing the strategies adopted (Barney, 1991). The resource based theory was developed during early 1990s and according to this theory each organization is a pool of resources and capabilities. These resources and capabilities determine the performance and strategies of a company. If organizations start having resources similar to each other, then the value created by these firms will be similar and there will be no competitive advantage in the concerned industry. A resource based view of a firm thrust upon path dependency and heterogeneity. This is because every organization has a unique resource bundle. The theory also argues that to retain a sustainable competitive advantage, a company should have resources and capabilities that are valuable, not substitutable, imperfectly mobile and difficult to imitate. These four resources can lead to differences in the capabilities and the strategies followed by the companies and can be responsible for a sustainable and competitive environment. These characteristics can be reinforced or induced through isolating mechanisms (Rumelt, 1984). These mechanisms are the forces that limit the duplication or neutralization of competitive activities of other organizations. This isolating mechanism consists of two g roups. The first is impediments to imitation which means strategies that block the potential entrants