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Strategic managers use REV to assist in making directional decisions which must take into consideration the strategic management process, organizational climate, tragic liabilities and assets, dynamic capabilities and core competencies. The BRIO model will be discussed to assess how strong an organizations competitive advantage is. REV encounters a level of criticized shortfalls which will be discussed and alternative organizational performance models which can be used in addition to REV for assisting in strategic decision making.
Sustaining a competitive advantage in any industry proves itself to be a challenging task to strategists. Barney (1991) initiated a fundamental theoretical start to the understanding of how organizations are able to have a sustained competitive advantage. The paradigm developed is now known as REV. Strategic Human Resource Management (SHRUG) use this concept to assist in understanding the influencing factors to develop the competitive advantage which provides analytical information which is used to make internal strategic decisions (Arena, 2008).
REV for sustainable competitive advantage has the composition of following terms; Value, Rareness, Imperfect Immutability and Substitutability (Barney, 1991) see Figure 1 below for the integrated model. Barneys model has impacted on the field of HRS in two important ways; Revs influence has been instrumental in establishing a acre perspective in the field of HRS research(Snell et al. , 2001 b). Secondly, REV has provided a theoretical and contextual framework which has previously been criticized for being non-theoretical and overly applied in practice (Snell et al. 2001 a). Figure 1: Relationship model for achieving sustained competitive advantage (Barney, 1 991) The strategic management model as seen below in Figure 2 identifies key integration points with HRS practices. HRS management is one of the key factors for the SUcceSS of the strategic model as the HRS practices lead to employees knowledge, skills and abilities to derive a higher firm reference overall (Bowen and Castoff, 2004). Figure 2: The strategic management process (None and et. Al. 1 998) REV provides an understanding to SHRUG as to what areas of the business require focus by the resources. Bowen (Bowen and Castoff, 2004) discusses how firms develop employees skills, knowledge and motivation levels so they are directly in line with the aims of strategic management. The existence of the SHRUG direction is known as the organizational climate which is made up of; practices, policies, procedures, routines, employees perception, interpretability and understanding of what behaviors are expected and awarded within an organization (Bowen and Castoff, 2004).
SHRUG use theories such as REV to analyses the company’s performance and position then manipulate the organizational climate as a directional tool to assist the company in meeting desired strategic goals. Bowen (2004) discusses SHRUG systems must ensure the design approach taken considers the employee and focuses on a sustainable organizational competitive advantage. The SHRUG system must ensure the approach taken is; visible, understandable, legitimate authority, relevant, consistent, instrumental, valid, employee consensus, agreed and fair.
If the SHRUG take an approach which clearly analyses all items and are well thought out and implemented within the HRS system successfully, and are in line with REV then sustainable competitive advantage will be imminent Arena (2008) undertook an empirical study to analyses what the primary human resource strategic decision making liabilities and assets which affect companies the most.
It was concluded that the top 5 strategic liabilities and assets are as follows: # I Strategic Liabilities Strategic Assets 1 | Bad Management Strong Brand I 2 | Bad Strategy Good customer service I 3 | Financial problems I Specialized knowledge I | Bad acquisition execution I Product differentiation 5 | Fraud I Good executives I Through understanding the major strategic factors which directly affect business resources decisions, companies are able to concentrate in ensuring business decision making can be further analyses to ensure incorrect decisions are not made.
A second key component to understanding the strategic liabilities and assets is the ability to be able to assess competitors in ensuring your company s decision is not second to the competitor. Analysis models such as the REV are used in this instance to provide analytical information regarding your company in juxtaposition to your competitors which assists in making strategic decisions. Cuba et. AAA. (2009) discusses dynamic capabilities as a key possession which a company must have to be able to adapt to various changes to the company.
Factors affecting the company could be; external, internal, macro and micro etc. These factors must continually be adapted to for a company to have a long term competitive advantage. For example in the early sass’s, IBM employed 400 strategic planners whose primary role was to continually assess and assist mineral managers and provide analytical information when required. The strategic planning team was continually able to offer ways for technological advancements which were in line with the business needs to ensure the dynamic adjustments are made in a timely manner (Harried, 2006).
Cuba (2009) has developed a model which describes the integration of an organizations core competency and its various resources. SHRUG are able to make more informed decisions when they are able to understand the relating business components and the connection of each, Figure 3 below shows the different resource types and their interrelation’s pips. Figure 3: The different resource types and their interrelationships (Cuba et al. , 2009) Wright (2001 ) discusses an empirical study undertaken on various NCAA men’s basketball teams using the REV framework.
Through the strategic level implementation of the framework found there was a clear increase in performance and an Outperforming in coaching strategy with the teams who implemented the REV framework when juxtaposed to the teams which did not implement REV. Further to Barney’s model created in 1991 relating to the factors influencing a sustainable competitive advantage a new model has been developed. The model revolves around, Value, Rarity, Difficulty to Imitate, Organization (BRIO) see Figure 4 below.
This BRIO model analysis is used by strategic managers to determine their current organizational performance to assess the level of competitive advantage. When implementing the BRIO framework into real life examples, the success of the McDonald’s franchise becomes imminent. McDonald’s has a proven history record of being the top competitor in the fast food industry, their products are; valuable, rare, difficult to imitate and the organization has a high level of organization.
With the highly evident level of sustainable advantage McDonald’s will continue to be the leader of fast food throughout the world. Figure 4: REV BRIO analysis for competitive advantage (Raincoat, 2012) REV as discussed in Wrights (Wright, 2001 ) article it suggests the development of a good product idea is not just derived solely from the individuals. Company’s idea creation is embedded within the SHRUG policies and procedures; therefore the integration of all core competencies of a company is the creator of products in the REV model.
The REV model does have some areas of the SHRUG scope which are not necessarily entirely covered. Since Barney (1991) wrote his first article on REV which conceptualized the theory, it has been continually criticized. SHRUG must be vigilant to the surrounding competitors and the environment which they are operating in. SHRUG must ensure that the human capital employed is in line with what the company requires. For companies to maintain a sustainable organizational competitive advantage it is imperative the synergy within the actual resources meets the organizational requirements.
SHRUG must not entirely rely on the REV model for organizational performance, because the model does not sufficiently concise judgment and psychological requirements of human capital which individuals play for the development of organizational value assessment and creation (Cranberries et al. , 2009). The REV is found to subjectively have a clear failure in acknowledging the value of all organizational human capital. SHRUG must ensure that with the implementation of REV, the managerial resources sector must be analyses in further details before relying on Barneys (1991) theory for organizational competitive advantage (Cranberries et al. 2009). Further to the criticized views of the REV radium, alternative HRS theories used in conjunction with REV may provide an increase probability and reduced risk for organizational performance to be maintained. Additional strategic analytical tools and theories provide strategists with the ability to be able to make more informed decisions whilst identifying potential risks. Market Based View (MBA) analysis focuses on the traditional market economy relating to the physical capital of an organization.
When the use of both MBA and REV are used simultaneously they provide a broader knowledge base field for SHRUG to be able to make superior strategic decisions (Global and Anyone, 201 1). Additional models such as Porters 5 Forces and the Lynch view also are to be considered when assessing an organizations performance for a sustained advantage. The results of the analysis of the alternative models should not be discounted by strategists as all theories cover separable portions of SHRUG.
The Resource Based View which was conceptualized by Barney in 1991 started a revelation to the field of Human Resource Management and the correlation to sustainable organizational performance. Since 1 991 SHRUG decision making models have continually been evolving and greater knowledge and experience is being plopped in this field which is assisting organizations strategic managers to be greater equip with analytical tools to assist in decision making.