Resources and capabilities

Resource is a basic concept in economics, meaning expenditures in the form of raw materials and work machines. An asset is a specific amount of tangible or intangible assets to be used in the future.

Resources and capabilities are regarded as the key success factors for achieving high market share, fast development, increase in revenues and profits, creativity and innovation, technological progress, management efficiency and employee motivation.

Types of corporate resources

Main types of corporate resources include:

• Human resources - individual employees and the organization department dealing with personnel policy, for example, school recruitment, motivating and dismissing employees,
• Cash Resources - cash accumulated by a specific entity from the sources of its revenues, at its disposal (but not yet issued),
• Material resources - possessed and controlled by the company production factors in material form, for example, fixed assets including real estate, technical equipment, means of transport, machinery and some current assets, including raw materials and inventories,
• Knowledge resources - those that are related to the analysis and collection of knowledge, as well as the access and identification function,
• Information resources - dividing into material and non-material resources. Material resources are licenses and patents, and non-material resources are those that can not be estimated and are not legally protected,
• Organizational processes - interrelated works that follow the input data one after the other into output. It is implemented by various organizational units often identified with such terms as the business process, economic prose or management process,
• Access to natural resources,

Resources in the company

In the company, we distinguish five different categories of resources:

1. Fixed assets long-term tangible pieces of property that are used in the production of income and are not expected to be consumed or converted into cash within one year at least.
2. Production in progress factors involved in unfinished production.
3. Stocks of raw materials created in the event of untimely future deliveries.
4. Inventories of finished products that ensure sales continuity.
5. Cash reserves that will provide liquidity.

Business capabilities

Business capabilities are closely related to corporate resources and include mainly:

• Important processes and functions
• Unique competences of employees and managers
• Organizational model and business model
• Relationships with customers and suppliers
• Organizational culture
• Organizational climate

Examples of Resources and capabilities

• Natural Resources: Examples of natural resources include air, water, soil, minerals, plants, animals, and energy sources such as sunlight and wind.
• Human Resources: Human resources, or labor, includes the physical and mental talents of people to create goods and services, such as manufacturing, construction, agriculture, healthcare, financial services, and education.
• Financial Resources: Financial resources, such as savings, investments, and credit, enable businesses to purchase the materials and labor they need to produce goods and services.
• Technology Resources: Technology resources, such as computers, software, and communication systems, are used to create and improve products and services.
• Organizational Resources: Organizational resources, such as personnel, processes, and procedures, enable businesses to operate efficiently and effectively.
• Innovation Resources: Innovation resources, such as research and development, enable businesses to develop new products and services.

Advantages of Resources and capabilities

Resources and capabilities are essential components of any organization. They provide the means to achieve goals and objectives, and can be a major source of competitive advantage. Following are the main advantages of resources and capabilities:

• Ability to Innovate: Resources and capabilities provide organizations with the ability to innovate and develop new products and services. This can help to create a competitive edge and increase revenue.
• Cost Reduction: By utilizing resources and capabilities, organizations can reduce costs associated with production. This can result in increased profit margins and improved efficiency.
• Flexibility: Resources and capabilities allow for organizations to be more flexible in responding to changing market needs. This can help to maintain a competitive edge in the market.
• Sustainability: Resources and capabilities can help to ensure sustainability over the long-term by enabling organizations to adapt to changing market conditions. This can help to reduce the risk of failure.
• Talent Pool: Resources and capabilities can help to attract and retain talent. This can help organizations to better compete in the market and increase their overall performance.

Limitations of Resources and capabilities

Resources and capabilities are limited by a number of factors that can affect an organization’s ability to produce goods and services. These limitations can include:

• Time - The amount of time available to produce something or complete a task is limited and can be a major challenge.
• Money - Organizations need funds to purchase necessary resources and to pay employees.
• Skills - The organization must have the skills and knowledge to use the available resources to create their product or service.
• Technology - Technology can be used to speed up processes and increase efficiency, but organizations must have access to the right technology in order to do so.
• Physical Space - Organizations must have enough space to store their resources and create their product or service.
• Access to Resources - Organizations need access to resources, such as raw materials, in order to create their product or service.
• Access to Markets - Organizations need access to markets in order to sell their products or services.
• Regulations - Organizations must comply with applicable regulations that can limit their ability to produce certain goods or services.

Other approaches related to Resources and capabilities

• Resource-based view: A strategic management approach that focuses on the resources and capabilities of an organization to gain a competitive advantage.
• Dynamic capabilities: A theory that suggests that organizations should constantly re-evaluate their resources and capabilities in order to be flexible in the face of changing market conditions.
• Core competencies: A theory that suggests that organizations should focus on their core competencies in order to gain a competitive edge in the marketplace.
• Value-chain analysis: A strategic management approach that focuses on the activities that add value to the organization’s products and services.

In summary, resources and capabilities are a fundamental concept in economics, but other approaches such as resource-based view, dynamic capabilities, core competencies and value-chain analysis can be utilized to gain a competitive edge in the marketplace.

Resources and capabilities — recommended articles

Organizational strategy — Capital resource — Development cost — Fixed capital — Strategic information system — Knowledge capital — Availability of resources — Cost avoidance — Functional strategy

References

• Barney, J. B. (2001). Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. Journal of management, 27(6), 643-650.
• Bilkova, M., Greco, G., Palmigiano, A., Tzimouls, A., Wijnberg, N. (2018). [The logic of recources and capabilities.
• Danneels, E. (2010). Trying to become a different type of company: dynamic capability at smith corona. Strategic Management Journal 32; 1-31.
• * Wang, C. L., & Ahmed, P. K. (2007). Dynamic capabilities: A review and research agenda. International journal of management reviews, 9(1), 31-51.

Footnotes

Author: Magdalena Stanaszek