Tsang, Simon Chi Kin
Creating Sustainable Competitive Advantage- A Resource-Based View: Case Studies of Bloomberg L.P and Reuters Group.
[Dissertation (University of Nottingham only)]
This paper investigates the requirements of creating sustainable competitive advantages for financial information industry from a resource-based view perspective. It proposes an instrument to determine the relevant strategic assets applicable in financial information industry to achieve sustainable competitive advantage. Although Bloomberg L.P has been in the financial information industry for only 22 years as compared to the 150 years history Reuters Group, its major competitor, the recent figures showed that Bloomberg has continued to grow its subscriber base through 2003 and into 2004 (Electronic Information Report, 2004). The loss of Reuters group's market share leads to a discussion of how company can achieve sustainable competitive advantage in the market place. The resource-based view of the firm has emerged as a popular theory of competitive advantage as Barney (1991) wrote that "firm is said to have a sustained competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when other firms are unable to duplicate the benefit of this strategy" (Barney, 1991). Moreover, resources that are sources of sustainable competitive advantage are called strategic assets (Amit & Schoemaker, 1993; Barney, 1991).
Based on our findings, we identified the following as the main ingredients involved in creating sustainable competitive advantage from resource-based view analysis. First of all, similar to earlier studies, the strategic assets adopted by Bloomberg L.P and Reuters Group are intangible in nature. The analysis identified five strategic assets being utilised by the two companies being researched, they are database, employees, organisational structure, branding and new initiative. These strategic assets can usefully be applied to the two research companies as well as other players in the financial information industry, where they can analyse or refine their existing strategic assets to create sustainable competitive advantage. Secondly, evidence from the analysis suggests that database, contents, employees, organisational structure and new initiative are the important strategic assets adopted in the daily customer service process for the players in the financial information industry. The customer service process of Bloomberg L.P, leader in customer service, has adopted all the strategic assets as well as the non strategic assets. As a result, we suggest the more the firm deploy the identified resources into the customer service process, the better the level of customer service. Reuters Group should improve their customer service process by adopting branding resource. One of the proposals is a marketing campaign with a goal to relate the customer service process to their positive image of a long history in this industry.
The third implication is that the stronger the sharing of strategic assets between the parent company and their diversified business units, the better is the resources integration process. Bloomberg L.P has done a far better job in strategic assets integration with his subsidiary, Bloomberg Tradebook in terms of resources integration. This is accomplished by the commitment from senior management to facilitate a better alignment of business objectives between the subsidiary and the parent company. For example, Bloomberg Tradebook has fully integrated its customer service process with Bloomberg L.P. As discussed above, Bloomberg L.P is capable of utilising all resources available in the firm to implement industry leading customer service process. By sharing this invaluable resource, Bloomberg Tradebook is able to provide the same premium level of customer service to his customers. Furthermore, an effective and efficient resources integration is facilitated by a simple and flat organization structure, which this is a strategic asset adopted by Bloomberg L.P according to the RBV analysis. If senior management in Reuters Group wants to adopt organization structure resource to improve its resource integration process, they have a choice to implement a corporate restructuring by either improving the alignment between the business objectives of Reuters Group and Instinet Group or sell off Instinet Group to third party.
This paper is concluded by summarising the result of the discussion about RBV and SCA as evidenced from the case studies. Instead of contributing yet another descriptive definition about RBV and SCA, this analysis has concentrated on blueprinting a list of requirements from resources-based point of view for financial information industry player to analyse and refine their strategic assets. More specifically, the analysis of the cases has illustrated what are the resources being utilised in a daily operational process. Similar analysis can be applied in different functional process across the firm to understand the effectiveness of strategic assets utilisation. Moreover, based on empirical case studies, effective and efficient resource integration process requires the commitment from senior management to facilitate a better alignment of business objectives between the subsidiary and the parent company. Further studies can be concentrated on improving the firm's weakness identified in the SWOT analysis by using an RBV approach.
Dissertation (University of Nottingham only)
||Sustainable Competitive Advantage, RBV, Resource based view, competitive advantage, Strategic Management, case studies
||31 Jul 2006
||28 Sep 2016 13:18
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