Resources are organizations assets and are thus the building blocks of the organization (p.138). Understanding and using these resources to obtain and sustain a completive advantage is key to the success to a firm's survival. Grant proposes a five step resource based approach to give a firm a strategy to approach this completive advantage.
1. Identify and classify the firm resources and terms of strengths and weaknesses. This is important to ensure the firm does not put itself in a position that it cannot support without its recourses. Or biting off more that it can chew.
2. Combine the firm's strengths into specific capabilities and core competencies. The combining of strength can allow for more production and expertise in certain area. Also, core competencies are the backbone of a firm. Combining these assets can also allow for more production and achieving the overall goal of gaining the competitive advantage.
3. Appraise the profit potential for the capabilities and competencies. Complete analysis of what the profit will be. If there is no profit to be made, a firm should re-evaluate its strengths and weaknesses.
4. Select the strategy that best exploits the firm's capabilities and competencies relative to external opportunities. By selecting the best strategy the firm can best use its resources to accomplish it overall goals. The firm's strength is key in the overall consideration.
5. Identify resources gaps and invest in upgrading weaknesses. By identifying its weaknesses, firms can work on getting better in this area by either training or replacing the employee.