Rio Tinto: Resource-Based View
Introduction
Rio Tinto was established in 1873 and 1905. Currently, it is considered as the leading mining and exploration companies in the globe. The companies find, mine and process the mineral resources of the earth – such as metal and minerals that are vital in making thousands of everyday products which meet the needs of the society and contribute to the improve standard of living. The activities of the companies span the world with production from every continent. The companies are offering products such as aluminum, copper, diamonds, energy products, gold, industrial minerals and iron ore (Rio Tinto, n.d.).
Rio Tinto is a contemporary business which is committed in serving all of its stakeholders. Thus, in all of its activities, the company follows the very best practice in terms of safety, ethical business, social and environmental responsibility, together with sustainable development (Rio Tinto, n.d.).
The main objective of the company is to maximize profit towards its investors by operating in responsible manner and in sustainable manner in the process of finding, mining and processing minerals – areas of expertise in which the Group has a competitive edge. The strategy of Rio Tinto focuses investing in large, long life and cost competitive advantage driven by the quality of opportunity, not choice of commodity (Rio Tinto, n.d.).
The Resource-Based
The resource-based view (RBV) of strategic management focuses on the development of core competencies. This theory has been concisely described by Pahalad and Hamel (1990) both achieved the scientific breakthrough and innovation of this theory, even though the notion rooted from Penrose (1959). It is important to take note that RBV theory explains the differences in the performance of the company and its competitiveness. Thus, it is applied in showing the reasons behind the successful and unsuccessful implementation and application of the mass customization business strategy, and to expand the understanding of the organizational systematic framework by McKelvey. This theory contrasts with the dominating theory of strategic management from the 1980s, the market-based view of strategic management. This theory tackles the strategic behavior and success of a company with the primarily exogamic factors. On the other hand, the resource-based view assumes that competitive advantage and profits above the industry average can be achieved on the basis of superior internal resources of strategic resources and capabilities as source of economic rents, then competitive advantage. The theory focuses on the idea that firms are bundles or portfolios of tangible and intangible resources. Some of these resources are of a given importance in the process of establishing a competitive advantage and enables the differentiation between the competitors – thus all of these are the vital and core competencies of a company (cited in Moser, 2007).
In evolutionary economics theory, strategic variability among the companies is expected. Different routines inside the organization are connected towards the capability of the organization to generate and gain from innovation, differentiate one company from another. These differences in routines are considered as the consequence of the diverse decision-making strategies applied by the company, which are considered as source of durability, inimitability as well as differences among the companies. When a new technology or innovation materializes, individual companies improve its strategies in connection to the technology as well as other of these important strategies which will prove to be more acceptable towards the marketplace than the others.
The organizational heterogeneity which materializes mirrors the fact that the marketplace selects given strategies, companies and new technologies compare to others. Thus, the RBV of the company focuses that a company is considered as a heterogeneous bundle of different resources, which can help in order to establish different strategies. The fundamental principle of the resource-based view of the company is that the resources and capabilities of the firm which are precious, uncommon, inimitable and non-substitutable and for which the company is organized in order to exploit, at the same time, create a uniqueness or difference which will help organization to acquire competitive advantage.
Rio Tinto is considered as one of the largest mining companies in the world, thus, the company is implementing different tools, strategies and methodologies that will help them to acquire and maintain competitive advantage, particularly in an industry wherein management is considered as complicated.
References
Moser, K. (2007). Mass customization strategies – development of a competence-based framework for identifying different mass customization strategies. Lulu.com.
Rio Tinto. Who we are. Retrieved on 4th December, 2010 from www.riotinto.com
Credit:ivythesis.typepad.com
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