One of Waterfall Apparel's core values is to provide unbeatable customer service, a commitment introduced to the company by its founder more than 10 years ago. This value is expressed in the company's "True to You" campaign, which promises a no-questions-asked returns policy and an offer to stitch the customer's initials onto any item for free using a patented sewing technique, two features that are not offered by any of Waterfall's competitors. Although the campaign has resulted in a 10 percent decline in profits, Waterfall has decided to continue to pursue its founder's vision to reward customers and maintain employees' sense of purpose. Why does Waterfall's culture, exemplified by the "True to You" campaign, fail to support a competitive advantage?
A) It does not increase economic value creation for the firm.
B) It is not a rare resource.
C) Waterfall lacks founder imprinting.
D) The culture is not difficult to imitate.

Question

Quizplus · Accepted Answer

For organizational culture to be the basis of a firm's competitive advantage, the firm's unique culture must help it in some way to increase its economic value creation (V-C). That is, it must either help in increasing the perceived value of the product/service and/or lower its cost of production/delivery. Moreover, according to the resource-based view of the firm, the resource-in this case, organizational culture-must be valuable, rare, difficult to imitate, and the firm must be organized to capture the value created. Waterfall's culture fails to support a competitive advantage because it does not increase economic value creation for the firm, as evidenced by the 10 percent decline in profits.

One of Waterfall Apparel's Core Values Is to Provide Unbeatable