How do rare resources differ from valuable resources?

Rare resources are characterized by their limited availability among competing firms, which is reflected in the statement about them not being controlled by many competing firms. This scarcity means that when a firm possesses a rare resource, it gains a competitive advantage because that resource is not readily available to others. Such a resource can include unique technologies, patents, or specific locations that enhance a company’s market position.

While valuable resources contribute to a firm's ability to improve efficiency and effectiveness, being valuable does not necessarily mean that the resource is rare. A resource can be valuable and still be widely available, meaning many firms could easily access it, which would dilute its competitive advantage. Hence, the distinction between rare and valuable resources lies in their availability and control among firms in the industry. Understanding this distinction is crucial for strategic management, as it highlights the importance of acquiring and maintaining rare resources for sustained competitive advantage.