Chapter 4: RESOURCES

Prepared by:
Dr. Nazatul Shima Abdul Rani
School of Management
 Learning outcomes
• By the end of this chapter, you should be able to:
• Identify the attributes of strategic resources such
as valuable resources, rare resources, hard-to-
copy resources and non-substitutable resources;
• Discuss the resources types and how these
resources influence success;
• Evaluate your preferred team role;
• Explain why some teams work and others do not,
and ;
• Identify types of networking.
INTRODUCTION
IDENTIFYING ATTRIBUTES OF STRATEGIC
RESOURCES
What is a resource?
A resource is anything of quality and is useful. No entrepreneurs are alike and no two new firms
are identical.
Resource based theory values creativity, uniqueness, entrepreneurial vision and intuition and
initial conditions.
Basic steps are:
1. Buy (or acquire) resources and skills cheaply
2. Transform (the resource or skill) into a product or service
3. Deploy and implement (the strategy)
4. Sell dearly (for more than you paid)
Sustainable competitive advantage only true when resources and capabilities are:
1. Valuable : able to exploit resources because of environmental opportunity.
2. Rare: able to take advantage of the resources because not enough for all competitors.
3. Hard to copy: able to take advantage of the resources because competitors cannot duplicate
them.
4. Non-substitutable: able to take advantage of the resources because can not be substituted
by other resources.
RESOURCE ATTRIBUTES AND COMPETITIVE
ADVANTAGE
 Video break….
• http://www.dailymotion.com/video/xd1805_
entrepreneur-resources-to-live-the_news
• http://www.youtube.com/watch?
v=_cVqY5bpPJU&feature=related
 RESOURCES TYPES

• Six types of resources which are:

– 1. Physical
– 2. Reputational
– 3. Organizational
– 4. Financial
– 5. Intellectual
– 6. Technological
 Physical Resources
• The tangible property, the firm uses in production
and administration.
• The firm’s plant and equipment, its location and
the amenities available at that location.
• Natural resources can affect the quality of its
physical inputs and raw materials.
• Since most physical things can be manufactured
and purchased, they are probably not rare or
hard to copy.
 Reputational Resources
• The perceptions that people have about the company.
• Reputation can exist at the product level as brand loyalty or at the corporate level
as a global image.
• Technological resources may be short-lived because of innovations and inventions,
reputational capital may be long lived.
• Value of reputational relationships goes beyond personal relationships.
• Criteria for ranking corporations:
– The ability to attract, develop, and retain top people.
– The extent of community and environmental responsibility.
– The quality of management.
– The use of corporate assets.
– The firm’s financial soundness.
– The firm’s value as an investment.
– The quality of products and services.
– Innovativeness.
 Organizational Resources
• Firm’s structure, routines and systems.
• The organization’s structure is an intangible resource that can make the difference
between the organization and its competitors.
• Structure that promotes speed can be the entrepreneur’s most valuable resource.
• Organizational structures separate the innovation from the production function,
speed innovation; those that separate marketing from production, speed
marketing.
• For new ventures that have emerged from the developing stage or those that are a
spin-off or business development effort of an ongoing firm, other intangible
resources are available.
• Collective remembered history (myth) and recorded history (files and archives)
may also be considered organizational resources.
• Organizational history can be incorporated into the culture of the new venture,
providing a set of rules, norms, policies and guides for current and future behavior.
 Financial Resources
• Financial resources represent money assets.
• Financial resources are generally the firm’s borrowing capacity and its ability to
generate cash for its internal operations.
• Ability to raise money at below-average cost is an advantage to the firm’s credit
rating and previous financial performance.
• Various indicators to financial management skills are debt-to-equity ratio, its cash-
to-capital investment ratio and its external credit rating.
• Limitations of Financial Resources:
1. Financial resources are valuable
2. Financial resources are rare
3. Financial resources are hard to copy
4. Financial resources are non-substitutable with resources that are common
• Financial resources are valuable and necessary, but financial resources are not
rare, hard to duplicate or non-substitutable, they are insufficient to be a source of
sustainable competitive advantage.
• Capable financial management involves complexity and a human element that is
valuable, rare, hard to copy and non-substitutable.
Intellectual and Human Resources
• Knowledge, training and experience of the entrepreneur and his or her tram of
employees and managers.
• Includes the judgment, insight, creativity, vision and intelligence of the individual member
of an organization.
• Skills of the entrepreneur:
– Knowledge
– Training
– Experience
– Judgment
– Insight
– Creativity
– Vision
– Intelligence
– Social skills
• Diversity interacts with strategy in 3 ways which are to improve performance, improved
productivity, improved return on equity and improved market performance.
 Technological Resources
• Technological resources are made up of processes, systems, or
physical transformations.
• Labs, research and development facilities and testing and quality
control technologies.
• Knowledge generated by research and development are protected by
patents is a resource, such as formulas, licenses, trademarks, and
copyrights.
• Intellectual capital is embodied in a person and is mobile.
• Technological resources are physical, intangible, or legal entities and
are owned by the organizations.
• Technological resources: machines, computer system, equipment,
machine tools, robots, complicated electronic can be duplicated and
reproduced.
• Patent: it will be illegal for someone to commercially develop an exact
copy.
 TEAM
• Team size and composition affect the team
processes and outcomes.
• Entrepreneur will only succeed in growing their
company if they get a good management team to
work with.
• Attracting a good staff is always difficult for small
firms because of perceived lack of job security,
uncertainty about promotion prospects and difficult
for new people to fit into an existing team.
TEAM
 Video Break…..
• http://www.youtube.com/watch?
v=pCxakVfzBrA
• http://www.youtube.com/watch?
v=nOJ0l1oR0Wg&feature=related
 ENTREPRENEUR AND NETWORKING
• Networking: the process of enlarging the
entrepreneur’s circle of trust, it is a negotiation
process.
TYPE OF NETWORKS
STRATEGY TO DEVELOP EFFECTIVE
NETWORKING
 Video break….
• http://www.youtube.com/watch?
v=dr5hKAdX2F4
• http://video.about.com/entrepreneurs/Netw
ork-More-Effectively.htm
Situations resulting from failure to
develop effective networking
Thank you…