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IAI Actuarial Core Principles · Business Management · Business and consumer needs, the industry value chain and competitive forces

Bharat Wealth Advisers argues that its competitive advantage is sustainable because its proprietary client-risk profiling tool was built over ten years, cannot be bought in the market, and rivals cannot easily copy how it is embedded in staff routines. Under the resource-based view, which pair of characteristics is the argument chiefly relying on?

The argument relies on the resource being rare and difficult to imitate. Under the resource-based view, a resource that cannot be bought and is embedded in organisational routines resists copying, so rivals cannot easily replicate it, which allows the advantage to be sustained.

  1. AThe resource is common and easily substitutable
  2. BThe resource is rare and difficult to imitateCorrect
  3. CThe resource is highly liquid and easily sold
  4. DThe resource is low cost and widely available
  5. The resource is regulated and therefore protected by law

Explanation

The resource-based view says advantage is sustained by resources that are valuable, rare, hard to imitate and not easily substituted. The tool cannot be bought and is embedded in routines, which points to rarity and inimitability. Common or widely available resources give no lasting advantage.

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