Google, YouTube, and the Questions of Value
In his formulation of the resource-based view (RBV) of the firm, Jay Barney lays out four conditions by which a firm can achieve strategy's Holy Grail - sustained competitive advantage. He frames the conditions as questions.
- The first is the question of value: do a firm’s resources and capabilities enable the firm to respond to environmental threats or opportunities?
- The second is the question of rareness: how many competing firms already possess particular valuable resources and capabilities?
- Next is the question of imitation: do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it?
- And finally there is the question of organization: is a firm organized to exploit the full competitive potential of its resources and capabilities?
According to Barney, the answer to all four questions must be "Yes" in order for a firm to have a basis for sustained competitive advantage, i.e. to significantly outperform its competitors over some extended time period.
While Barney's theory can be and often is used to analyze a firm's entire portfolio of resources and capabilities, it can also be used to analyze subsets of them. Point in case is Google's recent acquisition of YouTube.
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