Naked Economics Chapter 4

Chapter Four of the textbook is about understanding and managing firm resources, which is more of an internal analysis of the business. The main theory they discuss is the Resource Based View, which suggests that organizations that have strategic resources will have a competitive advantage over their competition and they define strategic resources as resources that are valuable, rare, difficult to imitate and nonsubstitutable. These resources provide the foundation upon which firms develop capabilities that give them the competitive edge over their rivals. As part of the resource discussion, Chapter 4 also talks about the marketing mix used to attract customers, intellectual property and also understanding the value chain as well as the supply

In his video he discussed how the business world has changed and that there are so many choices for businesses today. It requires an almost creative aspect to the new business model, which relates back to understanding that strategy is more of an art than a science. He mentions that businesses today can fall into a state of analysis paralysis in trying to determine the best business model and strategy to go forward. He argues that sometimes, you just have to make the best decision you can and move forward with that, understanding that sometimes you might fail. What I really love about this statement, is that is very entrepreneurial and I think it really encourages the thought of entrepreneurial orientation that we looked at in the last module. He also speaks to the need for business leaders to understand themselves and their capabilities, which really gets to the heart of the resource based view. But in addition, he stresses the point the manager should be entrepreneurial and understand that the environment is rapidly changing and you need to be able adapt quickly, be flexible and pivotable, and have a sense of what is coming on the horizon. I really felt like this was pulling all the chapters we have read together in looking at the strategy – it is an art, you must be creative and not fall into analysis paralysis, you need a leader with vision and an entrepreneurial orientation, you must be constantly evaluating your external environment and looking for those opportunities while you are managing your firms resources and capabilities because if you can understand yourself and your capabilities, you can sense and seize opportunities when they come your