The resource-based view state that the differences between firms’ resources determine the strategies the firm employs (Peng, 2013). The resources at the firms’ disposal, if correctly harnessed, can create a competitive advantage for the firm. The value, rarity, imitability, and organization (VRIO) model is usually used to explain the resource-based view of a firm to enable it to create and maintain a competitive edge over its competitors (Peng, 2013). SolarWorld USA’ s major resource advantage is that it is fully vertically integrated (Peng, 2013). This means that it carries out all the activities in its chain of production all by itself.
For example, it manufactures the silicon used to make the photovoltaic solar panels. With the raw materials, it manufactures the solar panels, sells them and even provides installation services to the customers (Solarworld-usa. com, 2014). SolarWorld USA is, thus, able to create a profitable and resilient value chain. The fully integrated solutions provided by SolarWorld USA enhance the value of its products. Its dual-purpose carport provides multiple opportunities for use of solar panels. SolarWorld USA utilizes rarity by producing polysilicon (Peng, 2013).
Creating a strong product segment makes it harder for competitors to replicate the product. If the product takes more time and capital to produce, it becomes rare. Since the Chinese firms receive as many incentives from their government as the US-based firms from the US government, the advantage of imitability is not enjoyed because of their financial strength match one another (Marconi, 2000). The Chinese government has been at the forefront of providing a suitable environment for the flourishing of the solar energy industry in China (Oremus, 2014). These products are then sold at extremely competitive prices in the US posing a great challenge to SolarWorld USA.
Lastly, SolarWorld utilizes its organizational value by having an experienced management team at the helm. This management team has been managing its operations for decades and is conversant with the various business cycles in the industry.
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