How useful is the Resource-Based View in explaining firm’s internationalisation strategies?
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University Of Surrey (UNIS)
Providing a deep dive into Apple and Tesla internationalisation process using examples and explaining what the Resource based view is and it is used when a company creates an internationalisation strategy, with references, introduction and conclusion.
How useful is the Resource-Based View in explaining firm’s internationalisation strategies?
Introduction
Resource-Based View (RBV) is a theory which focuses on the firm’s ability to achieve and sustain
competitive advantage by focusing on their internal strengths (Barney, 1991; Wernerfelt, 1984). This
theory will critically assess the usefulness when explaining internationalisation strategies for Apple
and Tesla. Apple is an American technology multinational enterprise (MNE), which uses the
differentiation strategy to deliver value through its innovative products in international markets
(Apple, 2021). Tesla is an American electric and energy MNE. It provides electric vehicles (EV’s),
batteries and sustainable energy products and services (Tesla, 2021).
RBV allows firms to see what their internal resources and capabilities are so that they can create a
competitive advantage. However, this requires having tangible and intangible resources, while being
heterogenous and immobile. The VRIO (Value, Rareness, Imitate, Organisation) framework then
determines if Sustainable Competitive Advantage (SCA) can be achieved. This can be assessed through
Apple’s and Tesla’s usefulness of the RBV. Resources and capabilities are part of the RBV allowing the
potential for creating competitive advantage, but they are needed to survive in the market. For
example, Apple and Tesla are both technology firms, R&D and technical knowledge clusters are critical
to ensure they have a competitive advantage. This is a fundamental part of their strategic
development to sustain their technical capabilities and market share. This will be demonstrated in the
usefulness of RBV for their internationalisation.
The usefulness of the RBV for Apple and Tesla
RBV states by formulating a strategy on the firms resources it presents new opportunities that will
result in higher returns in the long term. There are two basic assumptions in RBV for creating SCA:
these state that the resources and capabilities of the firm should be heterogenous and immobile
(Wernerfelt, 1984). Barney 1991 describes competitive advantage as a strategy which creates value
which is not currently being implemented by rivals.
The VRIO framework states if firm’s resources are valuable, rare, imitable and exploited they can
achieve competitive advantage which increases usefulness. The former Apple CEO, Steve Jobs was a
valuable resource as he created a corporate culture which fostered individuality and excellence. This
company ethos attracts talented individuals with technical expertise and motivation. However, just
because it was valuable at one point in the company’s strategy it does not mean it will always remain
valuable. Apple encourages ‘know-how’ by using their resources to pursue technical developments to
create innovative products which their customers demand and desire, this is presented in their
internationalisation strategy to increase competitive advantage. This capability provides the potential
for competitive advantage because they leverage the use of their firm-specific technical resources and
capabilities overseas which they would not have access to if they stayed in their home market. Once
value has been achieved firms need to establish rareness (Barney, 1997). This is accomplished in
Apple’s internationalisation process as the resources are widely available but the process for assembly
is protected by a patent (Apple, 2021). This combination of rarity and value allows for greater
competitive advantage as the resources are heterogenous. Apple’s products must be inimitable to
maintain competitive advantage. The patents create barriers to competitors wanting to duplicate their
strategy, allowing Apple to maintain competitive advantage when internationalising. Apple’s internal
strengths are used to exploit external opportunities, through their well-established international R&D
departments and resources. Therefore, their products are not easy to imitate resulting in limited
product duplication by competitors and creates competitive advantage when internationalising.
Apple’s reputation has become one of the most valuable resources as they have managed to
successfully leverage their strategic competences into new diverse markets, such as digital media. This
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