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The Concept Of Sustained Competitive Advantage

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Question:

Organisations claim that employees are the firms most important resource. However, many strategic decisions do not seem to reflect this belief and few Human Resources executives can explain how a firm's people can provide sustainable competitive advantage and the role of HR in this process (Barney & Wright, 1998). Critically discuss the resource based view, and how HR can be a source of sustained competitive advantage.
 
 

Answer:

Human Resource Management(HRM) deals with the process of recruitment and selection of the employees, provision of adequate training,  induction and orientation, motivation of the employees, compensation and benefits, health and welfare measures and assessment of the employees. It also refers to the process of maximization and utilization of human resources with the available skills and resources. It can be said that every organization  wants to have competent and skilled people for the effective and smooth  functioning of the organization. The HRM professionals in an organization  also has to determine  the standards of the industry, provide fair compensation packages and  encourage the people to work for the development of an organization (Storey 2014). The resource based view helps in achieving competitive advantage and it is also used to determine the strategic resources in an organization. The resource based view of HRM lays emphasis on some important key points such as identifying the key resources of a firm, assess whether the resources fulfill the VRIN criteria, protect and care for the resources. It is vital to exploit the different external opportunities and utilize the existing resources in a better way. Moreover, in resource based view, the resources are given the major role to help the companies (Armstrong and Taylor 2014)

 


The concept of sustained competitive advantage plays an important role in the sustenance of the company. In this era of globalization, sustainable competitive advantage plays an important role for the sustenance of the company. Sustainable competitive advantage helps in the long term success of an organization.  A business organization is said to have sustained competitive advantage when it implements a value creation strategy. Moreover, sustained competitive advantage does not depend on the calendar time and thus helps the firm to attain competitive advantage (Brewster et al. 2016). Sustainable competitive advantage has several advantages and it helps to avoid the difficulty in specifying competitive advantage. The unanticipated changes in the economic structure of any particular industry can be a source of competitive advantage and it possess no importance to the firm (Sparrow et al. 2016). There are some resources in a new industry that can be regarded as a source of competitive advantage and thus may be advantageous for a particular firm. The conditions within the culture of the firm are regarded as an important source of competitive advantage. Some firms help to obtain sustained financial performance from different organizational cultures and this it helps in the development of a particular firm (Barney and Wright 1998). The attributes of a firm’s culture can be used as a source in order to achieve superior performance. On the other hand, there are certain firm which achieves superior competitive advantage that are not subjected to any kind of imitation and thus it acts as a sustained superior performance for that particular firm (Lin and Wu 2014). The HRM professionals can be regarded as  a strategic partner in the provision of sustainable competitive advantage for an organization. It is the duty of the HR professionals to exploit and develop the unique characteristics of an organization. The HR executives must try to recruit the individuals with good skills, knowledge and talent who will help in the development of the organization. The HR executives must also try to nurture, execute and develop the different characteristics of the human resource of a firm that cannot be imitated by other organizations. The organization  must develop the practices and systems that will allow the human resource professionals to bear the fruit of competitive advantage (Marler and Fisher).

 


The resource based view is an important step in strategic management and it helps in the provision of different view point which are considered necessary for the success of an organization. The success of the firm depends on the joint capabilities and resources which are different from the competitors. As the concept of human resource is changing, the new policies may become different and it might be difficult for eliminating and strengthening the capabilities. The resource based view gives importance to the internal resources in an organization. The different models of strategic human resource development is based the assumptions that a business strategy is dependent on a unique set of values will help in adjusting the attitudes and behavior of the employees (Bromiley and Rau 2016). There are certain human resource policies that are based upon unique set of responses from the employees. There are many strategies that are to be implicitly assumed and it becomes easier to rearrange the different complementary resources and assets. Moreover, the resource based model also provides a theoretical rationale for the HRM in the implementation of a particular strategy (Boxall 1996). Moreover, human capital advantage according to the resource-based view refers to those potentials which will help in capturing the exceptional human talent with the latent productive possibilities in the organization. It can also be referred to as a  function of causally socially complex, ambiguous and historically evolved  process such as co-operation, innovation and learning (Albrecht et al. 2015).

The resources which are considered to be a set of sustained competitive advantage are based on three different principles such as durability, transferability and replicability. The resources must be durable. For example, the key resources for sustaining competitiveness of Apple are its brand value.  If a resource can be easily purchased or imitated by its competitors, it becomes less valuable. It also becomes important for the firm to assure that the key resource are immovable or there might be difficulty in the transfer of resources . The working conditions must also be good that the employees will be not willing to leave the organization.  On the other hand, the concept of replicability deals with the condition with which resources and capabilities can be built from the scratch. The resources must be built in such a way so that it becomes difficult for the competitors to replicate. It might be difficult for a product or resources to capture the market if the competitors easily copy the products  (Kozlenkova et al. 2014).

 


The contribution of human resources for the development of a company’s competitive position  depends on the characteristics and their performance. This emphasis can be highlighted using VRIO framework. It is the responsibility of the management to recognize the different features for the development of human resources in the company. The human resources that are characterized by VRIO framework are considered as high quality human resources and thus it helps in the provision of sustainable competitive advantage. The development of human resource must be in accordance with the changes that are occurring in the environment. They are considered valuable if there is elimination of threat from the environment. Moreover, the opportunities also enables the human  resource to be efficient focused on innovation and quality and consumer oriented. The state of competition and the plan of activities in the VRIO framework helps in the determination of  present as well as future core competencies of the company.  If the human resources are consumer oriented, efficient and focused on quality and innovation, they can be considered valuable. On the other hand, in case of human resource rarity, the value of human resource is considered necessary but it is not considered as a sufficient condition for gaining competitive advantage in the economy. It is necessary that the process of human resource development include spreading the tacit knowledge for the development of the company. In market conditions, the rarity of the employers is associated with the company which will help in frequent innovation in the industry. The issue of inimitability is regarded as  logical extension of human resource rarity. The development and acquisition of human resource involves high cost for retaining rarity and inimitability. If the competitors can imitate the characteristics of the employees to gain competitive advantage, it will be based on competitive equality and not based on imitation. The personality of the company is based on the employees and thus it will act as a seal to the company that becomes difficult to imitate. The development of human resources will also help to carry out the activities in a proper way.

 


Tata Motors has succeeded in the identifying the areas in which they have strong international competitiveness and thus this has helped them to convert the sustained competitive advantage. It can be said that the goal of liberalization in the economic policy framework  has tried to improve the profitability level of the company. These economic policies must try to remove poverty and try to foster prosperity among the people. The leaders and the managers of Tata Motors has clearly stated that in order to identify the different areas, it is necessary to have strong competitive advantage and thus will be converted to sustain competitive advantage in the economy. The company ensures that there is judicious mix of employees in the organization and this can be achieved through proper hiring of the employees in this sector. A consistent and regular recruitment of the people ensures that higher quality and top standard employees will be recruited in the company (Tata.in 2017). Moreover, government policies including the tax rate structure will affect the ability of the company to convert the international opportunity into reality and thus apply in the business entity. On the other hand, Nordstrom which is one of the most popular retail brand has focused on the recruitment process, compensation culture and practice in order to maintain highest sales among the retailers in USA. When the employees join Nordstorm, they are given adequate training which helps them to familiarize with the msission, vision and working conditions of the company. The promotion and the career growth opportunities also keeps the employees motivated and to share their responsibility for higher level jobs. It can be said that superior quality training, the high value of the organization will help in maximizing the potential of its pool of employees  (Nordstrom.com 2017). Therefore, it can be said that changing the attitude requires change in the business culture in the organization and it supports innovation, creativity and expertise in the organization.

 

References

Albrecht, S.L., Bakker, A.B., Gruman, J.A., Macey, W.H. and Saks, A.M., 2015. Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), pp.7-35.

Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.

Boxall, P., 1996. The strategic HRM debate and the resource?based view of the firm. Human Resource Management Journal, 6(3), pp.59-75.

Brewster, C., Houldsworth, E., Sparrow, P. and Vernon, G., 2016. International human resource management. Kogan Page Publishers. Barney, J.B. and Wright, P.M., 1998. On becoming a strategic partner: The role of human resources in gaining competitive advantage. Human Resource Management (1986-1998), 37(1), pp.31 – 59

Bromiley, P. and Rau, D., 2016. Operations management and the resource based view: Another view. Journal of Operations Management, 41, pp.95-106.

Kozlenkova, I.V., Samaha, S.A. and Palmatier, R.W., 2014. Resource-based theory in marketing. Journal of the Academy of Marketing Science, 42(1), pp.1-21.

Lin, Y. and Wu, L.Y., 2014. Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of business research, 67(3), pp.407-413.

Marler, J.H. and Fisher, S.L., 2013. An evidence-based review of e-HRM and strategic human resource management. Human Resource Management Review, 23(1), pp.18-36.

Nordstrom.com 2017. Nordstorm. [online] Available at: https://shop.nordstrom.com/ [Accessed 14 Dec. 2017].

Sparrow, P., Brewster, C. and Chung, C., 2016. Globalizing human resource management. Routledge.

Storey, J., 2014. New Perspectives on Human Resource Management (Routledge Revivals). Routledge.

Tata.in 2017. Tata. [online] Available at: https://www.tata.in/article/inside/73YbupY2yr8%3D/TLYVr3YPkMU%3D [Accessed 14 Dec. 2017].

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