Ningbo Bird: A Resource-Based View Analysis of Competitive Advantages

This report provides a Resource-Based View (RBV) analysis of Ningbo Bird, a Chinese mobile phone manufacturer. The analysis identifies the company's core competencies and how these contribute to its competitive advantage. The report uses the VRIO framework to evaluate Ningbo Bird's resou...Read More

Ningbo Bird
Resource based view (RBV) is a model that considers resource of the company as a key
performer to gain competitive advantage (Jurevicius, 2013). Before the resource is
considered as a competitive advantage, it has to pass all the character of VRIO (Valuable,
Rare, Imitable and Organisation) framework which is an internal analysis tool (Barney,
1991). The main reason behind this work is to identify the major resources of Ningbo Bird
that is can be considered as the core competencies and hence provide sustainable
competitive advantage to the company. All of its resource will be analyses using VRIO
framework.
RBV argues that knowledge, internal organisational structure and activities of the firm make
a company unique from its competitors (Madhani and Pankaj, 2009). Every firm enters in
the market with something unique and Ningbo bird entered into the Cellular market with
their strong founding team and technology. Their first phone was developed from the
collaboration with French company SAGEM who provided them with the equipment to
improve the quality of their product (NB6). With a dedicated team and French technology,
they were successful in the market in first phase. However, this is not the only resource that
helped them achieve their desired goal over the long run. Their other core competencies are
listed and explained below.
According to Prahalad and Hamel (1990), “Core competencies are the collective learning in
the organisation, especially how to coordinate diverse production skills and integrate
multiple stream of technologies”. To penetrate into matured market, Ningbo bird signed
contract with SAGEM to enhance their technology and equipment. In long run, other
companies can make such deals and they can enter in this market with similar technology.
So, by early 2000s, Ningbo bird had five research centers that helped help to be
independent in technology (NB7). This tangible resource of the company provided
significant growth to Bird’s phone. Since, this was the joint development with South Korea,
they grasped technology in product appearance, software development and user interface
design which was not done by any of their competitors (NB7). Setting up these type of
research center before any other competitors in the market, they were technologically very
advance and ahead. Also, in future, they can tackle with the threats related to innovation
thus, gives value to the company. This helped them develop the product with new
technology whenever they want and other companies cannot copy this easily and this
makes it a rare resource. Since these research centers cost a lot of money to establish, this
was hard or costly to imitate by any other competitors. Ningbo was able to use this resource
wisely and apply on their new products and came with new appearance for the product,
software was updated and provided good experience to their customers. Since this resource
was valuable for the company, rare in nature, non-imitable and organised, this was a great
competitive advantage for the company.
Due to various reasons, Chinese government restricted foreign companies to enter directly
into wholesale and retail market and foreign companies (NB9) had to rely on several agents
to deliver its product to wholesale market. This created multiple layer of distribution
channel for foreign companies whereas domestic company could remove the gap between
Ningbo and customers and distributors. With 29 branch office, 300 sub-branch office and

5000 sales and service staff (NB9), Ningbo was able to fill the gap between them and their
valuable customers and distributors. This not only helped them connect directly to their
customers and take feedback but also helped to connect with their distributors and boost
their confidence on Ningbo. First, this helped the company to create loyal customers and
second, improve their relation with their distributors by securing them with the risk of short
product life cycle. This created a value for the company. There were no local players that
had this type of advance sale network and foreign companies were not allowed enter in
wholesale and retail market which make this resource rare and non-imitable. Using this
sales and distribution channel, they were able to increase their sales. they started this sales
and distribution channel in late 2000s when the selling unit was just 700,000 and because of
market confidence, they were able to push 11.75 million cellular phones into the market by
2003 (NB6). This resource was helping to achieve significant growth and is the core
competency of Ningbo Bird.
Their performance management system was unique from their competitors. They were
operating in the city of Fenghua which is not counted as a major city in China. So, hiring an
experienced employee was not possible rather it had to rely on internal promotion (NB11).
Their performance management system is everything they need to enhance their
employee’s performance. Their performance management system encourages to discuss
goals between managers and subordinates and replace people in higher or middle level with
those whose contribution is higher in the organisation (NB12). Here people in the
organisation are encouraged to work harder to be on the safe side or developing a sense of
competition between the employees. Not only that, appraisal is done on their execution
skills, willingness to learn, communication and team working skill and team building skills
(NB12). This does not only promote hard work but creates a talent pool where employees
were capable of doing every task by giving their best and confidence. People were working
hard which improved the company’s performance which provides value to the company.
Since, all its competitors operate in major cities hiring new people is not a problem and
Ningbo is the only one that applies this type of performance management system. Also,
Ningbo does not only provide money to its employee but also give shares to the people who
outperforming than other employees and that is hard to imitate (NB12). Lastly, they have
been using this resource to enhance their employee’s performance and making them
capable to complete almost every task. This way their performance management system is
forming a talent pool which is a core competency of the organisation.
However, these are not the only competitive advantage that Ningbo bird have. Their strong
founding team who share same interest is another competitive advantage. Their
organisational goal and personal goals are same which prevents from dispute between the
board of directors (NB11). This create strong foundation for the company and in this world
where all of us have different opinion and interest, founders of Ningbo bird have same goal
which is rare to find. They combine give their best for the interest of the organisation which
helps them achieve significant growth. Moreover, government support cannot go
unrecognized in this case. Governments belief on start up like this was rare in case of China.
Right from the beginning, government is helping them with financial and other assistance
(NB4). This gave founding team a confidence that regulatory body was helping them and
confidence is very important for all the startups. They were able to develop first pager with
the help of government’s financial support. Government was not supporting any other

companies at that moment which makes it rare and non-imitable at the same time and with
this help they were able to carry out their operations in a smooth way.
We live in a world where the market is changing almost every day and companies like
Ningbo have to change accordingly. According to Prof. Teece, dynamic capabilities refers to
the ability of a company to deal with change (Teece and Pisano 1994). Since, the technology
in tech industry is never same, an innovative company should look for the change to adapt.
If we have to look into the case of Ningbo, we will see that they are capable of sensing
change in the market and adapt change accordingly. Their founding team was smart enough
to feel the changing interest of their consumers towards cellular phones (NB5). Even
though, they were making enormous growth in pager industry, Mr. Xu wanted to shift
company towards cellular industry. If we look now, this was by far the smartest decision of
the Founding for the company. They are frequently using their resource to sense upcoming
threat for the company. Their research centers are always trying to come up with innovative
ideas and technology and in this area adapting new technology is very important to avoid
risk. Besides that, their founding team is always ready to sense the change in the industry
and cope with the trend. This makes them dynamic in nature.
Lastly, resource based view (RBV) helped to Ningbo bird to identify their core competencies
that helped them gain competitive advantage in the market. Their research center, sales
and distribution channel and their well-structured performance management system all
contribute to the growth of the organisation. However, these core competencies are
interlinked with each other, their performance management system helps their employees
to enhance employee’s performance and they show their skills in research center and in sale
and distribution channel. In research center their enthusiasm to keep learning thing helps
company to have new technology and in sale and distribution employees use their
communication skills to maintain good connection with the customers and distributors.
However, RBV is not a perfect model to identify the core competencies of the company. this
model only talks about the resource of the company and ignores other external factor that
can make significant impact on the company (Sanchez 2008). But overall, this provides fair
amount of information to identify core competencies of the organisation and help to use
those resource in an appropriate manner in generating value for the company.

Reference:
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