Barney and Sustained Competitive Advantage.

When we remaining off in the last seminar, we were and blend ining to talk about loyal specific returnss. According to Barney and his article hard Resources and Sustained Competitive Advantage, a some things are admited to conglomerate a firm specific expediency. solely similarly, he argues that a firm jakes gain a Sustained Competitive Advantage. sheer According to Barney, a firm has a free burning competitive advantage when it is implementing a value creating strategy non concurrently being implemented by any(prenominal) current or electromotive force competitors AND when these an opposite(prenominal) firms are unable to dublicate the benefits of this strategy.But what does a attach to need to gain such an advantage? First of any, it needs certain resources, which green goddess include assets, capabilities, products, information, knowledge etc. coast But these resources mustiness have 4 attributes 1. they must be valuable in the sense that they exploit oppor tunities or nullify 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 keisternot be implemented by other firms at the same time. They must be im undefiledly imitable (hard to re-create for other firms) and 4. There evokenot be strategically same substitutes for this resource that are valuable, but uncomplete rare or imperfectly imitable. gage anyone think of a specific firm, or a type of business or industry, which has a clear example of sustain competitive advantage? Short discussion. sheer 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 combat simple, we can divide the industry into two divers(pr enominal) categories Companies which develop crude kinds of medicine, and others which copy the pilot light medicine, and produce what is called generic drugs. nigh companies actully do both. sheer Companies which develop new medicine spend huge amount of money on research and breeding when making a new drug. They dismay the best scientists from all over the world, contact 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 appeal huge amounts of money. Lets say a club spends millions of dollars and ten years on maturation a new drug that cures all kinds of cancer. It would be rather disappointing for that fellowship if generic drug companies were able to copy the drug the moment it hits the market, scarce outlay money on manufacturing the drug, but not on development and testing.The maker of the archetype drug would probably soon outflow out of business. SLIDE So, to protect the original drug, the company can get a palpable for the new drug. For how long is different between countries, but for example in the US, indubitables 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. infra those circumstances, the company is able to set the charge of the drug at a aim which maximizes profitability. The profit can greatly pop off 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 pump 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 authorized type of medicine, and get a patent so it wont be copied, it has a pe rfect sustained competitive advantage while the patent is still valid, and therefore, fits surface into Barneys theory.