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Resource based theory is a long-term strategy position based on tworealities The basic guidance for a firms strategy is the internalresources and capabilities available Second the primary source ofprofit remains within the resources and capabilities The infrastructurefor the theory is based on the idea that a firms resources andcapabilities are more stable than the external environment So thelong-term strategy is one that supports the business resources andcapabilities rather than the commitment the business seeks to satisfyGrant 2001A firms ability to make a profit can be broke down into two factorsFirst what is the attractiveness of the industry and second what isthe established competitive advantage A business strategy should beviewed as a firms ability to use its resources in the most efficientmanner to produce the highest returns above the costs of the resourcesGrant 2001 As soon as the firms resources are easily duplicatedbecome obsolete or depreciate the profits will decrease along withcompetitive advantage ResourcesIt is difficult to recognize a firms resources as managementinformation systems like financial data are inadequately designedManagement information systems neglect intangible resources and employeeskills Grant 2001 Employee skills are the most essential resource afirm has within its strategic plan The most important factor formanagers is their ability to identify the firms resources andcapabilities that allows the firm to achieve competitive advantage andperformanceResources need to be valuable and rare they must be difficult forother firms to replicate or substitute and firms need to manage adaptand deploy them in a product markets in order to create value Schmidt Keil 2013 p 206 A firm has two choices it can acquire or developresources that give it competitive advantage An important distinctionis the separation that resources are acquired or built before they cancreate value for a firm The value of resources must be greater than theinvestment of the firm during the acquiring or development processThe firms management experience is a key factor as the team must haveknowledge of how to use the resource Managerial judgment about
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