Think of the resources that make a particular product or service that you offer or plan to offer. In order to determine if you can charge above-average prices (and make above-average products), you want to be honestly able to answer yes to tests 1–3, before you answer test 4.

Test 1—Value: Does the resource help you increase sales or decrease costs? For example, using the Internet to log sales rather than using paper forms can be a major cost savings for personnel database management costs or can generate savings from multiple sources (e.g., billing, shipping, support) by being able to use the same database.

Test 2—Rareness: Is the resource rare enough that it lets you charge more than competitors who lack the resource? If you have locked up the sauce recipe from this year's national barbeque championship, few will be able to compete, and there are always aficionados who are willing to pay to be the first to try out the newest winner.

Test 3—Imitabilty: Can the competition imitate the resource? For example, can it hire people with the expertise that gives your firm its advantage? You might see your advantage as your knowledge of the local market, but what happens if a new player hires a salesperson with local market knowledge? Your advantage could be matched quickly.

Test 4—Organization: (Asked only if the resource passes tests 1, 2, and 3) Can the firm make use of the resource to increase sales or decrease costs? Many firms might have the ability to lock in rare resources or use the Internet to save money, but they often fail to act on these opportunities. Sometimes it is a fear of the new or the time and trouble it involves to change; sometimes they feel they are doing well enough without gaining a competitive advantage; and sometimes it's just the cost of doing something new. So to gain a competitive advantage, the willingness to commit the organization to it becomes the key empowering resource.