Whatare the Values and Assumptions of Business Strategy?
Thefact that economic thinking as well as acting has become soinfluential in the modern society is no secret anymore, especially inthe business world. Phillip Roscoe argues that this phenomenon iscertainly true in the field of management as well as corporatestrategy. Quite a number of business entities as well as individualshave not realized the aspect and importance of business strategy thusmaking them loose a great deal in the competitive world (Roscoe 19).There are quite a number of underlying assumptions that stem fromeconomic theory of Collins and Montgomery article. The name of thisarticle is Resource Based View.
Theunderlying assumptions stemming from the above mentioned article areas listed below hereunder. To start with, in any economic world, aresource must have some sort of value. A resource is valuable when itis scarce as well as appropriate. The scarcity of a resource makesthat resource to be valuable in the sense that many people will belooking for the same resource but its scarcity makes it hard foreveryone to have such a resource. This is one underlying assumptionthat is reflected in the Collins and Montgomery article.Competitively valuable resources have to go through some externalmarket tests of their value. To start with, competitively valuableresources must pass the test of exclusivity. This means that anyvaluable resource must be hard to imitate as well as copy. This helpsin reducing as well as limiting rivalry as well as competition.Further, exclusivity raises profit stream and help to sustain andmaintain the created profits. Qualities such as physical uniquenessfor the resource, which can be hard to copy and imitate makes it hardfor others to try and imitate the resource. Though inimitability isnot long last because competitors will eventually find a way toimitate the resource, managers can also have qualities such as pathdependency. This is where the course for creating the resourcebecomes scarce thus making it hard for competitors to copy.Anotherunderlying assumption in this article is economics of humanity. Thisarticle explains that networks of capital as well as politicalinfluence are vital in producing and providing institutionalentrepreneurs. The amount of an individual, and organization as wellas other entities will be prepared to pay for a commodity dependsupon the value they think they can gain from this commodity.Economics of freedom is paramount in any economy since every personis free to choose and use what they want. This makes the economicresource gain value in great deal through various personal tastes andpreferences (Reading 22).
Theabove mentioned assumptions are actually a reality. These assumptionsare as well underlying since they are the basis of any economicalbalance in and organization or even an individual’s life. In anybusiness world, competition is always a threatening factor to anyorganization. To start with economic resources should havecompetitive superiority. This enables firms to stay on top of theirgame in the market. They have to be hard to imitate. Economicresources are as well depreciating since consumers and suppliers docontrol their value. They are reality because economic resourcescannot be easily substituted. For these reasons, I totally agree withthe assumptions that I have chosen from this article.
Reading,Clive. StrategicBusiness Planning: A Dynamic System for Improving Performance &ampCompetitive Advantage.2nd ed. London: Kogan Page, 2002. Print.
Roscoe,Philip. ISpend Therefore I Am: How Economics Has Changed the Way We Think andFeel.Random House Canada. (Chapter 2: From Truck and Barter to the Meaningof Life). 2014. Print.