Importance of Resource-Based View in Strategic Plan Design
The resource-based view is very effective because resources are an important part of an organization that defines the organization's distinctive competencies and capabilities. It helps in the competitive advantage over our competitors and helps in the growth and profitability of the firm.
Resource-based view helps the organization to understand the accessibility of resources and using/implementing/allocating those resources effectively and efficiently.
Resources are of three types:
1. Rare resources (which other organization doesn't have much or doesn't have at all)
2. No substitute for resources that you have/own
3. Hard to imitate by the other competitive organization
The type, amount, and nature of resources are to be understood by the organization so as to use it and allocate the resources properly.
It looks at the specific products and services rather than a vaguely defining organization. Resources and functional both are important in understanding the strengths and weaknesses of an organization.
Resource-based view, therefore, helps in identifying resources available and have easy access to it, so that those resources can be turned to strengths and create profitability and growth by having differentiation, competitive advantages and distinctive competencies and capabilities.
Industrial organization's view only explains the externality much and overall industrial views and doesn't have a specific view. Therefore, the resource-based view is prioritized because it helps in doing an internal audit of the firm and is also an important part of an organization.