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Resources of a Business

Author: Jim Riley  Last updated: Sunday 23 September, 2012

In our introduction to the topic of business strategy, we used Johnson & Scholes' definition stating 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

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 loan

s- 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?

Human Resources

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.)

Physical Resources

The category of physical resources covers wide range of operational resources concerned with the physical capability to deliver a strategy. These include:

Production facilities - 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 facilities - Marketing management process- Distribution channels
Information technology - IT systems- Integration with customers and suppliers

Intangible Resources

It is easy to ignore the intangible resources of a business when assessing how to deliver a strategy - but they can be crucial. Intangibles include:

Goodwill The difference between the value of the tangible assets of the business and the actual value of the business (what someone would be prepared to pay for it)
Reputation Does the business have a track record of delivering on its strategic objectives? If so, this could help gather the necessary support from employees and suppliers
Brands Strong brands are often the key factor in whether a growth strategy is a success or failure
Intellectual Property Key commercial rights protected by patents and trademarks may be an important factor in the strategy.



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Revision quizzes for business students

Starting a Business

Sources of Finance for a Startup
Franchising
Cash Flow Forecasting for a Startup
Creating & Protecting Business Ideas
Startups and Understanding the Market
Market Research for a Startup
Locating the Startup Business
Choosing a Legal Structure for a Startup
Employing People in a Startup
Generating and Protecting a Business Idea
Using Breakeven in Decision-Making

Finance

Revenues
Breakeven Basics
Costs, Revenues and Profits
Business Costs
Using Budgets
Using Breakeven in Decision-Making
Investment Appraisal Basics
Financial Strategies
Measuring and Improving Profit
Improving Cash Flow
Working Capital
Balance Sheet
Income Statement
Financial Efficiency Ratios
Profitability Ratios and ROCE
Liquidity Ratios
Gearing

Marketing

Competition
Products & Brands
Place (Distribution)
Promotion
Pricing
Price Elasticity of Demand

Business Organisation

Basics of Business Growth
Business Activities
Legal Structure Basics
Franchising
Sole Traders and Partnerships
Limited Companies
Generating and Protecting a Business Idea
Organisational Structures

People

Working in Teams
Communication Basics
Communication Methods
Workforce Planning
Recruitment, Selection & Training
Employee Motivation
Organisational Structures

Operations

Operational Objectives
Critical Path Analysis
Scale and Resource Mix
Lean Production
Capacity Management
Customer Service Basics
Managing Quality
Operational Decision-making
Using Technology in Operations
Working with Suppliers

Economic Environment

Economic Sectors
Government Spending & Taxation
Inflation
Unemployment
Interest Rates & Monetary Policy

Business Strategy

Leadership styles
Business Culture
Change Management







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