Johnson & Scholes' state that "Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".
So, what are these "resources" that a business needs to put in place to pursue its chosen strategy?
Business resources can usefully be grouped under several categories:
Financial resources concern the ability of the business to "finance" its chosen strategy. For example, a strategy that requires significant investment in new products, distribution channels, production capacity and working capital will place great strain on the business finances. Such a strategy needs to be very carefully managed from a finance point-of-view. An audit of financial resources would include assessment of the following factors:
Existing finance funds
- Cash balances
- Bank overdraft
- Bank and other loans
- Shareholders' capital
- Working capital (e.g. stocks, debtors) already invested in the business
- Creditors (suppliers, government)
Ability to raise new funds
- Strength and reputation of the management team and the overall business
- Strength of relationships with existing investors and lenders
- Attractiveness of the market in which the business operates (i.e. is it a market that is attracting investment generally?)
- Listing on a quoted Stock Exchange? If not, is this a realistic possibility?
The heart of the issue with Human Resources is the skills-base of the business. What skills does the business already possess? Are they sufficient to meet the needs of the chosen strategy? Could the skills-base be flexed / stretched to meet the new requirements? An audit of human resources would include assessment of the following factors:
Existing staffing resources
- Numbers of staff by function, location, grade, experience, qualification, remuneration
- Existing rate of staff loss ("natural wastage")
- Overall standard of training and specific training standards in key roles
- Assessment of key "intangibles" - e.g. morale, business culture
Changes required to resources
- What changes to the organisation of the business are included in the strategy (e.g. change of location, new locations, new products)?
- What incremental human resources are required?
- How should they be sourced? (alternatives include employment, outsourcing, joint ventures etc.)
The category of physical resources covers wide range of operational resources concerned with the physical capability to deliver a strategy. These include:
- Location of existing production facilities; capacity; investment and maintenance requirements
- Current production processes - quality; method & organisation
- Extent to which production requirements of the strategy can be delivered by existing facilities
- Marketing management process
- Distribution channels
- IT systems- Integration with customers and suppliers
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