Barney and Sustained Competitive Advantage.

When we left-hand(a) off in the last seminar, we were on the button scraming to talk about flying specific values. According to Barney and his article square Resources and Sustained Competitive Advantage, a a couple of(prenominal) things are pauperisationed to pass a firm specific return. scarce in any case, he argues that a firm support gain a Sustained Competitive Advantage. sailplaning According to Barney, a firm has a sustain competitive advantage when it is implementing a value creating strategy not concurrently being implemented by either current or authority competitors AND when these former(a)wise firms are unable to dublicate the benefits of this strategy.But what does a conjunction need to gain such an advantage? First of all(a), it needs certain resources, which butt end include assets, capabilities, products, information, knowledge etc. fall away But these resources mustiness have quaternity attributes 1. they must be valuable in the sense that the y exploit opportunities or ware threats in a firms environment. This goes without saying. 2. They must be rare among a firms current and potential competition. This simply means that this resource or strategy deposenot be implemented by other firms at the same time. They must be im holyly imitable (hard to repeat for other firms) and 4. There butt endnot be strategically equal substitutes for this resource that are valuable, but incomplete rare or imperfectly imitable. tush anyone think of a specific firm, or a type of business or industry, which has a clear example of preserve competitive advantage? Short discussion. slip We thought about what kind of a firm could gain a sustained competitive advantage, and came to the conclusion that certain pharmaceutical companies are able to gain perfect sustained competitive advantage.To explain why, we need to have a look at the pharmaceutical commercialize. To make things a sting simple, we can divide the industry into 2 unalik e categories Companies which develop sensitive kinds of medicine, and others which written matter the first medicine, and produce what is called generic drugs. more or less companies actully do both. drop away Companies which develop new medicine spend huge heart and soul of money on research and suppuration when making a new drug. They repay the best scientists from all over the world, assemblage huge amounts of medical information, test the drugs etc.They also need to prove the safety of a new drug, and demonstrate its effect, in special clinical trials. And of course, they need to market the new drug. This process can monetary value huge amounts of money. Lets say a political party spends millions of dollars and ten years on ontogeny a new drug that cures all kinds of cancer. It would be rather disappointing for that go with if generic drug companies were able to copy the drug the moment it hits the market, completely expenditure money on manufacturing the drug, but not on development and testing.The maker of the schoolmaster drug would probably soon overflow out of business. SLIDE So, to protect the original drug, the company can get a bare for the new drug. For how long is different between countries, but for example in the US, unornamenteds give 20 years of protection. But for as long as a drug patent lasts, the firm enjoys a period of market exclusivity, or monopoly if you like. nether those circumstances, the company is able to set the set of the drug at a train which maximizes profitability. The profit can greatly die development and production costs of the drug.Often, when the patent runs out and many other companies start making generic drugs, the prices fall dramatically and real competition starts. But to nitty-gritty things upp, new developed medicine can fit Barneys theory They can be valuable, rare and not only hard to copy, but simply impossible. SLIDE The point is if a firm can develop a new most-valuable type of medici ne, and get a patent so it wont be copied, it has a perfect sustained competitive advantage while the patent is still valid, and therefore, fits headspring into Barneys theory.