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Study notes

Strategic Resources of a Business

  • Levels: AS, A Level
  • Exam boards: AQA, Edexcel, OCR, IB

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

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?

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

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