Resource Based View (RBV) brought closer to home

I am reasonably satisfied that in developing their strategies, most organisations in Zimbabwe rightly address the issue of strategic position by considering their external environment at three levels: the macro-environment; the industry/sector environment; and the market/competitor environment. 

However another key component of strategic position which is evaluating strategic capability is usually not adequately addressed. This involves an appraisal of the key resources and capabilities of the organisation. The overall objective of this analysis (also known as internal analysis) is to discover a firm’s capabilities, which are an aggregate of its assets plus its knowledge plus its experience.

Indeed, the Resource Based View (RBV) perspective suggests that to gain competitive advantage a company needs to define and understand its resources, core competencies and strategic capabilities.  Barney (1991) identified four key attributes that firms should consider with regard to identifying competitive advantage through strategic capability, namely; Value, Rarity, Inimitability and Non-substitutabilit (VRIN). That is: 

• Value – Do the resources add value in terms of cost and returns?
• Rarity – How unique are these resources/competencies/capabilities to the organisation?
• Inimitability – Can competitors imitate or obtain these resources/competencies/capabilities?
• Non-substitutability – Are there substitutes to these resources/competencies/capabilities that are available to competitors?

For most high capital investment operations such as mining and manufacturing in Zimbabwe they fail on the first hurdle. The organisations lack investment. The equipment is either outdated and or costly to run. This is the case with most manufacturing companies, hence they cannot compete with imports from South Africa. Customer service is poor due to innumerable breakdowns. Unit Costs are higher due to the inefficiencies throughout the value chain. 

In the case of mining firms, the companies lack investment, as simple as that. The diamonds mining companies' inability to mine beyond alluvial is a good example. Mbada Diamond is a case in point, no meaningful investment has been made in mining equipment and hence today the company is on the brick of collapse.

In contrast, Delta and Econet corporation are good examples of what can happen when a company gets the basics right.

Indeed,  failure to spend the requisite capex means the business cannot compete as capabilities and competence issues are more complex than adequate resourcing. Instead, these organisation spend enormous amount of time building strategies on a faulty base. The message is simple: adequately resource your businesses, upgrade equipment, update technologies, invest in the right machines to survive. Put the resources in place, or just close shop peacefully.

Indeed, the most difficult part of this RBV is the configuration, for it is in the uniqueness on the resource configuration that the competitive advantage is realised. However for most Zimbabwe companies, priority should be on getting the basics right first, i.e., provide adequate capital expenditure or die!

Your views are welcome!