(a) Values are fundamental principles or standards that guide the behaviour
and decision-making of individuals and organizations. They are at the
core of strategic intent and help define a company’s culture and ethical
posture.
A company’s values set the tone for how people think and behave,
especially in situations involving dilemmas. They create a sense of shared
purpose, enabling all stakeholders to align and focus on the long-term
success of the company.
Values have both internal and external implications:
•
Internally, they influence employee behaviour, build trust, boost
morale and help in creating a consistent workplace culture.
•
Externally, they impact how customers, investors and society at large
perceive the company. A majority of consumers prefer companies
whose values reflect their own belief systems.
Some
common
organizational
values
include
Integrity,
Trust,
Accountability, Humility, Innovation and Diversity.
Values and Intent are two distinct concepts:
•
Intent refers to the purpose of doing business – the long-term
direction the company aims to pursue.
•
Values are the principles and ethical standards that guide how
decisions are made and how the business is conducted.
While they go hand-in-hand, values often drive intent. Therefore, values
are broader and more foundational than intent.
(b) To achieve better performance and sustainable competitive advantage, a
company must focus on the four major characteristics of its resources and
capabilities which determine the sustainability of its competitive
advantage:
(i) Durability: Durability refers to how long the firm’s resources and
capabilities remain effective before they deteriorate or become
obsolete.
For example, in industries with rapid product innovation, such as
technology, patents may quickly become outdated. In contrast,
strong brand names often possess a high degree of durability,
contributing to sustained competitive advantage.
(ii) Transferability: Transferability determines how easily a competitor
can acquire or replicate the resources and capabilities. If key
resources and capabilities can be easily transferred between firms
(such as through hiring key personnel or acquiring technology), the
competitive advantage is less sustainable. The more difficult it is for
rivals to gain access to similar resources, the more sustainable the
advantage.
(iii) Imitability: This refers to how easily competitors can imitate or
develop the same resources and capabilities. If imitation requires
complex processes, organizational routines or is dependent on a
firm’s unique corporate culture, it becomes difficult to replicate. For
instance, in financial services, where innovations are not legally
protected, imitation is easier, reducing sustainability.
(iv) Appropriability: Appropriability refers to the ability of the firm’s
owners to appropriate the returns on its resource base. Even where
resources and capabilities are capable of offering sustainable
advantage, there is an issue as to who receives the returns on these
resources.