Business Research Assignment: Business Models, Resources & Capabilities for Corporate Strategy

Question

Task: Instructions:
The business research assignment involves a critical evaluation of the following topic;
"Business models and unique resources and capabilities are seen as critical elements of the corporate strategy. Critically discuss how these elements impact the competitive advantage in a rapidly changing environment" You are required to conduct a literature review demonstrating that you have researched the viewpoint from all sides of the debate.
Research thought starters only (not questions to be answered)
• Explore what is meant by business model and unique resources and capabilities in the context of the corporate strategy?
• What are the key areas being discussed in current literature?
• Who are the key authors?
• Why are business model and unique resources and capabilities important?
• What are the benefits of effective business model?
• Why some corporates find challenging to develop and deploy unique resources and high-level capabilities?
• How business model and unique resources and capabilities contributes to competitive advantages?

Basic details:
The length of the assignment is 2,000 words +/-10%. You will be penalized if it fails outside this boundary. The 2,000 words limit does not include the reference list. All sources used to support your arguments put forward should be listed at the end providing a reference list rather than a bibliography. In-text referencing and a reference list MUST be in Harvard Referencing Style.

Diagrams and tables could be used but they must be discussed and critiqued in the discussion.

Answer

Introduction
It is evident in the present study on business research assignment that with rapid developments in global economy, the traditional balance between customers and suppliers is changing. Globalization has been opening up new trading regimes, new communications and technology, thereby providing customers with numerous choices to choose from (Mishra, 2017). This has made it essential for the businesses to become more customer-centric by revaluating their value propositions being presented to these customers. Thus, the new environment has further increased the need for not only addressing the varying customer needs but also understand how to capture more value through products and services. In this regard, well-developed business models along with dynamic capabilities and resources of the business are essential. Without such business models, innovators would not be able to deliver increased value to the customers or capture any value from their innovations (Mishra, 2017). The business model will help in describing the design of value creation, delivery and capture mechanisms for satisfying the customers. The purpose of the research study here is to critically evaluate the role of business model and unique resources and capabilities in contributing towards competitive advantage in the rapidly changing environment. In this regard, existing literature on business models enhancing competitive advantage has been critically analysed in this research study.

Literature Review
The business strategy of a company is aimed towards satisfying customers in the market. It focuses on developing business models for identifying the needs of these customers and recognizing innovative methods for addressing those needs in an efficient manner. According to Ranjith (2016), a business model can be referred to as an architecture about how a firm can create and deliver value to the customers alongside the included mechanisms used for capturing a share of that value. It generates value by using its resources, thereby developing various capabilities for identifying new revenue sources and become financially viable. The author has further pointed out that the integral parts of a firm’s business model are value proposition, dynamic processes and strategic resources (Ranjit, 2016). While value proposition helps in enhancing the firm’s ability to fill gaps present in customer experiences, capabilities reside in the company’s value chain by using strategies assets or resources. Furthermore, Baden-Fuller and Mangematin (2013) have identified some basic dimensions related to the definition of business model. These include identifying customers, customer engagement, monetization and value chain and linkages. Customer identification involves recognizing targeted users and customer groups of the firm that determines whether the business model in one-sided or multi-sided. The growth in technology and Internet has facilitated expansion of various platforms from where companies can gain target customers (Baden-Fuller and Mangematin, 2013). Furthermore, customer engagement refers to the use of value proposition that emphasizes on understanding customer needs from various perspectives. Monetization involves capturing a share of the value and goes beyond pricing but further includes identifying modes, methods and timing of payments. Lastly, value chain or linkages indicate the mechanisms of the firms for delivering the products or services to the target customers. Thus, this shows that business model should be a stripped-down description of the causal relationship existing between the firm, customers and money. Firm’s resources and capabilities are essential elements embedded in the business model that help in gaining competitive advantage. According to Guesalaga, et al. (2018), the resource-based theory provides a framework for understanding the relationship between firm’s competitive advantage with its improved performance through efficient use of resources and capabilities. In this regard, resources and capabilities of a firm are considered as tangible and intangible assets for formulating and implementing their strategies to gain competitive advantage. As pointed out by Ferreira and Fernandes (2017), resources are referred to as assets or inputs that organization owns, controls and have access to on a semi-permanent basis for using in production. These resources can be tangible or intangible. Here, tangible resources include property, plant, equipment, financial assets, IT systems, while intangible ones are knowledge, client involvement, sales orientation, reputational capital and leadership skills (Guesalaga, et al., 2018). On the other hand, capabilities can be defined as specific organizational abilities for performing tasks and utilizing resources to achieve desired outcomes. These can be either operational or dynamic. Operational capabilities are administering, operate, govern, purchase and manufacture, while dynamic capabilities include orchestrate, adapt, innovate and recognize opportunities.

Competitive advantage of firms has become essential in competitive business environment for enhancing market share and staying ahead of competitors. As opined by Madsenand Walker (2015), competitive advantage of firms refers to the factors enabling them to produce better goods or services or more cheaper ones than the rivals in the market. These factors help the productive entity of the company to incur more sales and improved margins as compared to the competitors. Thus, competitive advantage is attributable to various factors including intellectual property, cost structure, product offerings, business model or customer service.These factors are beneficial in making the products or services of a company more desirable to the customers. There are two types of competitive advantage, namely, comparative and differential (Baporikar, 2015). While comparative advantage refers to the firm’s ability of producing products or services of higher quality than rivals resulting in increased profit margins, differential advantage refers to producing both unique and higher quality products as compared to competitors. According to Huang, et al. (2015), two major forces determine the competitive advantage of a firm, namely, endogenous forces from capabilities and resources and exogenous force from its market position. This indicates that firms can achieve their superior performance from being in a stronger market position or by possessing valuable, non-substitutable, rare and inimitable resources. These are the two components of competitive advantage, the sources and outcomes (Huang, et al., 2015). Here, the resource-based framework provides the importance of resources and capabilities as the sources of competitive advantage while industrial organization framework states that the advantage is gained from stronger market position.

From this literature review section, the concepts of business model, resources and capabilities and competitive advantage of the firms. In this regard, the viewpoints of various scholars have been explored that helped in understanding the concepts and the connections between these variables.

Critical Evaluation
It has become of significant importance for firms to possess effective business models and ensure innovations in the same for catering to the rapidly changing business environment. It has been observed that such business model innovations are undertaken for generating higher returns as compared to product or process innovations in the companies (Geissdoerfer, Vladimirova and Evans, 2018). This is because it provides various benefits to the firm with its resources and capabilities. These benefits include competitive edge in the market, good brand reputation, attracting investors, ongoing business profit and financial stability. Here, sustainable business models offer additional benefits by enabling the firm to gain high risk mitigation and resilience, achieving additional diversification and attract co-creation of opportunities (Casadesus-Masanelland Heilbron, 2015). However, it has also been seen that business model innovations might also fail, which ultimately lead to disastrous economic consequences for the firms. It further results in considerable delays, dissatisfaction of customers and inability to adopt sustainable solutions. Furthermore, dynamic capabilities of the firm are considered as the capacity for purposefully creating, extending or modifying its resource base for gaining higher economic value than the rivals. These capabilities enable the firm in converting its resources to improved performance (?irjevskis, 2016). Dynamic capabilities enable the managers of the firms in handling problems presented by the rapidly changing economic landscape, advances in information and communication technologies and other external challenges. Thus, these capabilities are beneficial for the firm in designing or implementing an effective business model for the firm in dealing with any challenges (?irjevskis, 2016). However, it is not easy to build these capabilities as they depend entirely upon the distinctive characteristics of entrepreneurial managers, culture of the organization and history-honed routines (Teece, 2018). Such a complex system often makes it difficult even for the ones directly involved in building it to fully understand. While such string dynamic capabilities make it difficult for the rivals to imitate and provide sustainable competitive advantage, they also are harder to achieve in the firm (?irjevskis, 2016). Thus, it relies extensively on the ley role of strategic managers’ abilities of adapting, integrating or reconfiguring various skills, resources and competencies in the organization.

Firms require both tangible and intangible resources for gaining competitive advantage over rivals in the market. However, intangible resources become more beneficial in ensuring the success of the firms as they cannot be easily replicated and acquired by others (Kamasak, 2017). Despite this, it is essential for them to possess tangible resources as well as intangible ones cannot independently help the firm in gaining competitive advantage. Companies require idiosyncratic and heterogeneous resources for earning normal returns and to achieve competitive advantage these resources must be valuable, inimitable, rare and non-substitutable (Kamasak, 2017). In this regard, some of the identified intangible resources that cannot be replicated by rival firms include historical uniqueness, organizational culture, resource allocation, corporate reputation and interconnectedness. Thus, these resources must be integrated and reconfigured with the help of firm’s dynamic capabilities based on the environmental changes. Besides, intangible resources like intellectual capital (IC), financial capital (FC) and social responsibility (CSR) have often been recognized as important for gaining sustainable competitive advantage for the firms. For example, CSR activities of the firms help in conveying positive messages and reputations about the brands by creating a distinctive image in customers’ minds and attracting public’s opinion to the same. These resources cater to the social, environmental, economic and cultural aspects for ensuring sustainability and growth of the firm (Khan, Yangand Waheed, 2019). However, firms should undertake these activities in good faith not just for the purpose of enhancing their reputation. Intellectual capital includes intangible assets of technology, goodwill, customers’ knowledge, brand name and organizational culture. However, achieving this asset depends majorly on the human, social and structural capital present in the firms (Beattieand Smith, 2013). Without the participation of managers or employees, interpersonal relationships, organizational structure, decision-making and other systems, these resources will fail to contribute towards competitive advantage. Besides, financial capital enables the firms in using their financial assets and resources effectively for raising funds. Despite the presence of these resources, the requirement of tangible resources is indispensable for the companies without which they cannot operate or produce products or services for satisfying customers (Schriberand Löwstedt, 2015). Thus, both intangible and tangible resources alongside dynamic capabilities present in the business model are essential.

Conclusion
The research study aimed at critically analysing the role of business model, resources and capabilities in gaining sustainable competitive advantage. For this purpose, the researcher collected information for secondary source like journal articles. At first, a brief overview and background about business model and its connection with firm resources and capabilities was provided. This helped in making the readers getting accustomed with the research topic. The literature review section focussed on exploring views of different scholars about the key concepts of business model, resources and capabilities and competitive advantage. The report here identified the four basic components of business model as customer identification, customer engagement, monetization and value chains and mechanisms. It also analysed the collected information from the journal articles in the critical evaluation section. Furthermore, it also found out that resources can be tangible or intangible while capabilities are operational or dynamic. In this regard, intangible resources and dynamic capabilities help in providing sustainable competitive advantage to the firms. However, they cannot act independently without the presence of tangible resources and operational capabilities. Besides, two types of competitive advantage were also recognized, namely, comparative and differential. The report further helped in understanding how these resources and capabilities are used with the formation of an effective business model to gain competitive advantage in the market. Here, it was also found out that such resources and capabilities must be valuable, rare, inimitable and non-substitutable for ensuring competitive advantage. Thus, the report portrayed the use of business model and its components as the instrument for ensuring sustained competitive advantage.?

Reference List
Baden-Fuller, C. and Mangematin, V., 2013. Business models: A challenging agenda. Strategic Organization, 11(4), pp.418-427.
Baporikar, N., 2015. Information strategy as enabler of competitive advantage.
Economics: Concepts, Methodologies, Tools, and Applications, pp.599-610.
Beattie, V. and Smith, S.J., 2013. Value creation and business models: Refocusing the intellectual capital debate. The British Accounting Review, 45(4), pp.243-254. Casadesus-Masanell, R. and Heilbron, J., 2015. The business model: Nature and benefits. Emerald Group Publishing Limited.
?irjevskis, A., 2016. Designing dynamically “signature business model” that support durable competitive advantage. Journal of Open Innovation: Technology, Market, and Complexity, 2(1), pp.1-21.
Ferreira, J. and Fernandes, C., 2017. Resources and capabilities’ effects on firm performance: what are they?.Journal of Knowledge Management, 21(5), pp.1202-1217. Geissdoerfer, M., Vladimirova, D. and Evans, S., 2018. Sustainable business model innovation: A review. Business research assignmentJournal of cleaner production, 198, pp.401-416.

Guesalaga, R., Gabrielsson, M., Rogers, B., Ryals, L. and Cuevas, J.M., 2018. Which resources and capabilities underpin strategic key account management?.Industrial marketing management, 75, pp.160-172.
Huang, K.F., Dyerson, R., Wu, L.Y. and Harindranath, G., 2015. From temporary competitive advantage to sustainable competitive advantage. British Journal of Management, 26(4), pp.617-636.
Kamasak, R., 2017. The contribution of tangible and intangible resources, and capabilities to a firm’s profitability and market performance. European Journal of Management and Business Economics, 26(2), pp.252-275.
Khan, S.Z., Yang, Q. and Waheed, A., 2019. Investment in intangible resources and capabilities spurs sustainable competitive advantage and firm performance. Corporate Social Responsibility and Environmental Management, 26(2), pp.285-295.
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
Mishra, C.S., 2017. Creating and sustaining competitive advantage: management logics, Business models, and entrepreneurial rent (pp. 307-355). Cham: Springer International Publishing.
Ranjith, V.K., 2016. Business models and competitive advantage. Procedia Economics and Finance, 37, pp.203-207.
Schriber, S. and Löwstedt, J., 2015. Tangible resources and the development of organizational capabilities. Scandinavian Journal of Management, 31(1), pp.54-68. Teece, D.J., 2018. Business models and dynamic capabilities. Long range planning, 51(1), pp.40-49.