Understanding Strategic Business Planning for Business Analysts.

Matthew Coppola- Talk at the BA World Conference.

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Now how long a competitive advantage can continue really depends on how strong the resources and capabilities are and whether rivals can copy the competitive advantage they offer and their degree of Replicability.
Resources and capabilities can be copied if they can be transferred from one organisation to another.

Let’s look at each:

•    Durability
The increasing pace of technology especially in the IT hardware industry shortens the useful life span of most resources including capital equipment and proprietary technologies.
However if the organisation has a good corporate reputation, then this resource will be very durable and last forever.

•    Transferability
If rivals can acquire the resources required to imitate the strategy of a successful company, then that company’s competitive advantage won’t last very long.
Some resources however are not transferrable and are firm specific, such as employees.
For example dropping off a large percentage of the workforce may cut costs, but the firm will also lose employees with valuable firm specific knowledge and skills.

•    Replicability
If a firm cannot purchase a resource or capability, it must create it.
In retailing for example, competitive advantages that are gained from improving store layout, implementing efficient and fast point of sale technology and extended opening hours can be easily copied by competitors.
But on the other hand, sophisticated organisational routines which require a high level of communication, trust and collaboration amongst employees is more difficult to replicate.

One thing is to acknowledge the importance of resources and capabilities, but another thing is to actually apply it.
We will now look at an easy, step by step approach to how a company would appraise its resources and capabilities.

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