Firm Resources Capabilities And Conditions In Strategic Decision

Background

Discuss about the Firm Resources Capabilities,Conditions in Strategic Decision.

The objective of this report is to develop the framework which helps in identifying the resources, capabilities, and internal analysis to take strategic decision for improving the performance of the organization.

Entrepreneur search for the opportunities arises due to market friction, uncertainty, technological advancement, and etc. to remain ahead of their competitors. “The entrepreneur built strategy by analysing the interaction with customers, firms, and technologies” (Wadhawani, 2017). The trial and error process is used for solving the complex task. The knowledge should be acquired of the dynamic process instead of static process. “The demand of the product is influenced by advertisement of the product” (Anderson, 2016). Spontaneous ordering is come into process when the interaction of the entrepreneur increases with the market activities. The value of the product is measured in terms of its performance and popularity among the customers. The accumulation of organizational process helps in determining the resources and the capabilities of the product. The process of strategic management helps in determining the position and characteristics of the organization among its competitors. The selection of the strategy plays an important role for determining resources, capabilities, and condition of the internal firm for taking strategic decision for enhancing the performance of the organization. The internal analysis helps in bringing the differences in the process by formulating strategies implemented in the curriculum of the enterprise. The capabilities of the organization can be measured in terms of integration, making strategic decision, building of alliance, product development, building relationship, and development of technology. It has been analysed the resources of the organization are categorized into two sub-category which are named as Tangible resources and Intangible resources. Tangible resources are defined as the assets which can be seen, touched, feel, and measured. Product, equipment, manufacturing unit, and formal reporting structure are some of the example of tangible resources. The intangible resources are defined as the assets which are the base of the organization and they cannot be physically touched but only feel. Copyrights, patents, trademark, and unique pattern of routine are some of the example of intangible resources. The role of the entrepreneur is to find the strategic value of the tangible and intangible resources of the organization. The strategic value of the organization can be defined as the degree to which the core-competencies of the organization have been developed to enhance the performance of the organization. “The systematic management of the resources and capabilities helps in attaining competitive advantage” (Perera, 2012). The capacity of the organization to integrate the desired result is called as capabilities. The figure below shows the value chain model for the organization.

Literature Review

From the research and analysis, it has been studied that the strategic analysis of the firm is depends on resource based view and market based view. “Resource based view is the fundamental aspect of strategic decision for knowing the heterogeneity of the organization in terms of resources and capabilities of processes implemented within the enterprise” (Grand, 2011). Market based view reveals the information related with the industrial factors which are responsible for competitive advantage. The sustainability is the major focus of the market based view. “The cluster of resources helps in creating sustainability in achieving competitive advantage. Joint and collective action helps in upgrading the potential of the organization” (Evaldo, 2009).

It has been researched that there are four empirical indicators which helps in the generation of potential in competitive advantage which are categorised as value, inimitability, rareness, and non-substitutability. “Resources are categorised as assets, organizational processes, capabilities, attributes, knowledge, and information” (Rose, 2010). These resources help in the development of strategic plan which in turn helps in improving and enhancing the performance of the organization. The effectiveness of the strategic plan helps in keeping the organization ahead of their competitors. “Human resource management and organization performance together helps in measuring the attributes of the employees, utilization, perception, rating, and participation” (He, 2012). The strategic relationship helps in strengthening the human resource management system.

Past studies give the clear picture of the relationship between resources of the organization, capabilities, resources, and competitive advantage. It has been found that the organization capabilities depend on the relationship between organizational resources, and competitive advantage. “Value and quality are the pillars for improving the performance of the organization” (Ismail, 2012). The value and quality are described in terms of cost, product, and services. The parameter of cost helps in enhancing the performance of the organization and keeps it ahead of their competitors. “The performance of the firm can be enhanced by giving emphasis on flexibility of the product, accessibility, and reliability” (Tim, 2008). The attention should also be given on tangible and intangible perspective of the resources. The resources are categorised as financial, physical, human, and experiential. The capabilities of the organization can be measured in terms of integration, making strategic decision, building of alliance, product development, building relationship, and development of technology.  It has been researched that there are three factors which are responsible for attaining sustainability in competitive advantage which are categorised as cluster specific factors, firm specific factors, and country specific factors. The figure below shows the strategic analysis for sustaining competitive advantage:

Methodology and Data

The relationship between resources, capabilities, system, and internal analysis helps in remaining ahead of the competitors. The VRIO framework is used to measure the internal analysis of the organization. “The VRIO framework is composed of valuable, rare, inimitable, and organized” (Kor, 2011). The resources of the VRIO framework help in identifying the competitive position. The table below shows how the performance of the organization depends on valuable, rare, inimitable, and organization factors.

Valuable	Rare	Imitate	Organization	Competitive advantage	Performance
No	—	—	Yes	Competitive disadvantage	Below Normal
Yes	No	—	Yes	Competitive Parity	Normal
Yes	Yes	No	Yes	Temporary competitive advantage	Above Normal
Yes	Yes	Yes	Yes	Sustained Competitive advantage	Above normal

The research was conducted on Malaysian manufactures in 2017. The questionnaire was structured for obtaining the responses of the manufacturers to make the cross sectional study. This questionnaire is the study of the past for developing modification, combination, and extension on the organizational resources. The measurement of the competitive advantage is the score obtained from the responses given on the questionnaire. The main element of this questionnaire is cost, product, design style, packaging, product quality, services provided to the customers, technical support, and delivery speed. The organizational resources are measured in terms of financial resources, physical resources, machinery and equipment, experiential resources, and human resources. Interval scale is used for measuring the capabilities of the organization. “The capabilities of the information depend on human resource training program, product development capabilities, and lastly, relationship building program” (Sakhdari, 2016). The 10 items are used for measuring the performance of the organization which includes team work approach, logistic efficiency, company objective, policy and process, company procurement, networking, activities, procedures, manufacturing experience and reputation, and the relationship with suppliers and customers. The study includes 200 manufacturers which are randomly selected without putting any restriction on them. 135 manufacturers actively participate to give response to the questions asked in the questionnaire. The response rate of the questionnaire was 13.5%. Resources, capabilities, and system are the three variables which are used in the study of competitive advantage. The method helps in providing solution to some of the potential problems which are faced by the organization. The graph below shows the relationship between dependent variables and competitive advantage.

The result of the pilot study was 7. It has been analysed from the questionnaire that:

• The positive relationship should be developed between resources, capabilities, and competitive advantage of the organization.
• The positive relationship should be developed between enterprise resources and competitive advantage.
• The positive relationship should be developed between capabilities of the organization and competitive advantage
• The positive relationship should be developed between system, process, procedure, and competitive advantage.

Research Questions:

• What is the meaning of internal analysis of the organization?
• What is the relationship between resources and capabilities?
• What is the relationship between tangible and intangible resources with capabilities?
• What is the meaning of core competency?
• What framework is adopted by the organization for identifying resources, core competency, and capabilities?
• What is the meaning of competitive advantage

Conclusion:

Past studies give the clear picture of the relationship between resources of the organization, capabilities, resources, and competitive advantage. The performance of the firm can be enhanced by giving emphasis on flexibility of the product, accessibility, and reliability. The demand of the product is influenced by advertisement of the product. Spontaneous ordering is come into process when the interaction of the entrepreneur increases with the market activities. The organizational resources are measured in terms of financial resources, physical resources, machinery and equipment, experiential resources, and human resources. The strategic value of the organization can be defined as the degree to which the core-competencies of the organization have been developed to enhance the performance of the organization.

References:

Evaldo, J. (2009). Strategic resources and sustainability of competitive advantages in industrial clusters: Towards the general analytical framework. International journal of project management, [online] 19(23). Available at: https://www.anpad.org.br/admin/pdf/ESO2196.pdf [Accessed 5 Mar. 2017].

Rose, R. (2010). A review on the relationship between organizational resources, competitive advantage and performance, [online] 5(3). Available at: https://www.sosyalarastirmalar.com/cilt3/sayi11pdf/rose_haslinde_ismad.pdf [Accessed 5 Mar. 2017].

Ismail, A. (2012). The relationship between organizational resources, capabilities, system, and competitive advantage. Asian academy of management journal [online] 5(3). Available at: https://web.usm.my/aamj/17.1.2012/aamj_17.1.8.pdf [Accessed 5 Mar. 2017].

Kor, Y. (2011). Resources, capabilities, and entrepreneurial perception. 1st ed. [ebook] Available at: https://pdfs.semanticscholar.org/7af1/71ddab9b9fc5e6fa6b920cce6c6d553be441.pdf [Accessed 5 Mar. 2017].

He, J. (2012). Firm capability, corporate governance and competitive behaviour: a multi-theoretic framework. International journal of strategic change management [online] X(Y). Available at: https://www.business.illinois.edu/josephm/Publications/He_Mahoney_Wang_IJSCM.pdf [Accessed 5 Mar. 2017].

Anderson, J. (2016). Resource organization and firm performance- How entrepreneurial orientation and management accounting influence the profitability of growing and non-growing SME. International journal of Entrepreneurial orientation and management [online] X(Y). Available at: https://his.diva-portal.org/smash/get/diva2:928392/FULLTEXT01.pdf [Accessed 5 Mar. 2017].

Grand, S. (2011). Building strategizing capabilities in entrepreneurial firm. 1st ed. [ebook] Available at: https://www.druid.dk/conferences/nw/paper1/grand.pdf [Accessed 5 Mar. 2017].

Wadhawani, D. (2017). Historical changes and competitive advantage of the firm. 1st ed. [ebook] Available at: https://www.hbs.edu/faculty/Publication%20Files/17-052_ce716f44-7adb-40d3-9755-bb311f04c9e8.pdf [Accessed 5 Mar. 2017].

Sakhdari, K. (2016). Corporate entrepreneurship: A review and future research agenda. 1st ed. [ebook] Available at: https://timreview.ca/article/1007 [Accessed 5 Mar. 2017]

Tim, M. (2008). Strategic management of the small firms. 1st ed. [ebook] Available at: https://www.cemi.com.au/sites/all/publications/Mazzarol%20SEAANZ04%20paper.pdf [Accessed 5 Mar. 2017].

Perera, H. (2012). Importance of managing intangible assets in enhancing dynamic capabilities of firms. 1st ed. [ebook] Available at: https://journals.co-action.net/index.php/aie/article/view/17292 [Accessed 5 Mar. 2017].