Competitive outcomes for resources/capabilities in the banking sector

The goal of any strategic management process is to enhance the organisation’s strengths and putting them into good use. The aim is to achieve differing levels of competitive outcomes where the most desirable one is a sustained competitive advantage. This is achieved where a resource is valuable, rare, inimitable, and non-substitutable. The different competitive outcomes is as shown the table below.

Valuable	Rare	Inimitable	Non-substitutable	Competitive outcome
N	Y	Y	Y	Competitive disadvantage
Y	N	Y	Y	Competitive parity
Y	N	N	Y	Competitive parity
Y	N	N	N	Competitive parity
Y	Y	N	N	Temporary competitive advantage
Y	Y	Y	N	Temporary competitive advantage
Y	Y	Y	Y	Sustained competitive advantage

Using the grid above, it is possible to analyse some of the resources in the banking sector. The first one is finances.

Finances are valuable because they can be used to extend credit to customers and also be used to expand the organisation. They are therefore valuable. But they are not rare because most of the Tier 1 banks in a given economy would have a strong financial base. Besides, it is often possible for the less financially stable banks to borrow money from international markets where need be. Finances are therefore valuable but not rare; hence they contribute to competitive parity.

Another example can be made of management capabilities. Management is crucial because it influences the efficiency with which the organisation can utilise its other tangible and intangible resources. Timeliness in decision making also determines whether the organisation is able to utilise opportunities that arise in the business environment. This is besides the role of management in ensuring that employees are most productive and committed to the organisation. Management is therefore a capability that is likely to be very valuable to the organisation.

But the extent to which management excellence could be said to be rare depends on the degree of excellence. Above-average management skills are quite common especially among top organisations. Management excellence would therefore mostly contribute to competitive parity. But the level of management excellence could be so high that it can actually yield a temporary competitive edge. It would be temporary because even the highest levels of management excellence can be replicated when rivals are given time to either replicate or substitute the management excellence possessed by better performing organisations.

Convenience of location has in the past been a source of competitiveness with banks paying high rent amounts to secure office spaces in central business districts in most cities. This could be valuable. However, they are not rare and neither are they substitutable. When a bank located in a remote region is able to reach its customers through online banking, mobile banking, and use of automated teller machines, it certainly will have substituted locational excellence. This means that locational advantages can only at best contribute to competitive parity or very temporary competitive advantage.

Of all the resources a bank could possess, the brand is the one that would often generate a source of sustained competitive edge. Brands are representations of organisations that often assume a personality that consumers can relate to. The relationship between consumers and the brand is unique and difficult to replicate. This means that a sustained competitive advantage can be created where an organisation manages to generate very strong bonds between them and their brands.