This year d'Arnaud-Taylor intends to begin opening plants on the East Coast that will use yeast from the beetles to brew ethanol from sludge left over from paper milling. The plants will be able to make in total more than 100 million gallons of ethanol a year. That's a trickle, considering that Americans burn nearly 21 million barrels of oil every day. But it's a start. Thanks to federal subsidies and $60-a-barrel oil, it's a seller's market for ethanol.

And even if oil prices drop below $30 a barrel, Xethanol needn't worry, say experts. "Relying on cheaper processes than competitors could help the company if prices fall," says Anthony Marchese, president of Monarch Capital Group in New York City. Good news. Unless, of course, Uncle Sam takes away those hefty subsidies.

Here's the analysis:

1. The Question of Value: "Do a firm's resources and capabilities enable the firm to respond to environmental threats or opportunities?" First, I will define the resources and capabilities that are held by Xenathol. I believe they are the processes involved in producing ethanol from undesired materials such as garbage, in an efficient manner that reduces pollution, government subsidies, and technical competence. In other words, the founder's quote best explains their valuable resources; "Where there's muck, there's money". This aids the firm in responding to the environmental threat of pollution and increased waste production. Xenathol is able to recycle, thereby taking advantage of the seemingly worthless waste.

2. The Question of Rareness: "How many competing firms already possess particular valuable resources and capabilities?" Judging by the article, Xenathol appears to be the sole firm possessing these particular valuable resources, even though competitors are appearing at the horizon. The article suggests that Xenathol's experience and resources will aid them in lowering costs and maintaining their competitive edge regardless of competitors' attempts to enter the market.

3. The Question of Imitability: "Do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it? I believe that firms without the resources and capabilities of Xenathol face a cost disadvantage in obtaining them. Competitors will need to invest in research and development and/or reverse engineering in order to gain the technical competence that Xenathol has already achieved. Also, unless competitors benefit from the same federal subsidies of $60 per barrel of oil as Xenathol does, they will face serious cost disadvantages.

4. The Question of Organization: "Is a firm organized to exploit the full competitive potential of its resources and capabilities?" Considering the innovative practices taken on by the firm in terms of research and constantly discovering new ways of creating ethanol from unorthodox methods, I believe that the firm's organization must be one that encourages innovation. I assume that Xenathol is organized in a manner that encourages new ideas and concepts, and surely must fund research and development in order to continue on the innovative path that the firm is on.

5. Forms of imitation:

Direct Duplication: As previously mentioned, direct duplication may be possible through reverse engineering and research and development, however, it will be very costly. As for federal subsidies and social complexity, those aspects can not be duplicated, they can only be sought. Competitors will need to lobby for similar subsidies, which is a costly process, and may attempt to hire head-hunters in order to directly duplicate Xenathol, but that is also costly.

Substitution: Competitors may find other methods of producing ethanol from other materials or by-products, however, Xenathol has a competitive advantage in this field in terms of experience and scale, therefore, it will be difficult for competitors to keep up with Xenathol.

6. Competing brands may face cost disadvantages due to:

Causal Ambiguity: in the word's of Barney, "imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage". This is very much the case for Xenathol's competitors, and they will need investment in reverse engineering and research and development in order to achieve similar processes as Xenathol.

Social Complexity: I assume that Xenathol has many experts in the field of ethanol production other than the founder, and all of those experts represent "socially complex phenomena, beyond the ability of firms to systematically manage and influence".

Patents: Inevitably, Xenathol has patented all of its processes in order to "foreclose other firms from attempting to develop competing products".