Very Short Questions Answer
1. What is threshold resource?
Threshold resources are those capabilities needed for an organization to meet the necessary requirement to compete in a given market. These are the fundamental resources. Without these resources, an organization cannot run smoothly.
2. Define competitive advantage.
Competitive advantage may be defined as the advantage over the competitors. The unique resources and core competency of an organization provides competitive advantage. An enterprise should utilize the environmental opportunities and cope with the threats posed by environment using its capacity or strengths.
3. What is unique resource?
Unique resources are those resources which critically underpin competitive advantage. The entire working culture of organization must be committed towards developing unique resources. To enhance unique resources, the available resource must be utilized in full capacity.
4. What do you mean by strength?
Strength is the basic capability which an organization can use to gain strategic advantages over its competitors. Understanding strength is recognizing the weapons likely to be used to defeat the competitors. So, It is the inherent requirement of an organization for its success.
5. What do you mean by weakness?
Weakness is the basic limitation, which creates a strategic disadvantage for an organization. So, analyzing and identifying the weakness of an organization enhance it to avoid its constraints and achieve success.
Short Question Answer
1. Define resources and explain the different types of resources
Resources may be defined as the sum of asset (both tangible and intangible) that an organization uses to perform the activities effectively. Tangible resources are assets that can be observed and quantified. They are physical as plant, labour, and finance. The intangible assets are information, reputation and knowledge. Intangible resources include assets that are rooted deeply in the firm’s history, accumulated over time, and are relatively difficult for competitors to analyse and imitate. Resources serve as the input in production process. Resource availability and allocation are very important in strategic management. They provide strength and enable exploitation of opportunities. In this way, resources help gain sustainable competitive advantage and achieve long-term objectives. They enhance organizational capabilities.
Different Types of Resources
An organization needs different types of resources for its successful operation. Due to which it is often called as the bundle of resources. The different types of resources are as follows:
- Available resources: The resources that are currently available in the organization are called available resources. Some of the available resources of an organization are mentioned below.
- Physical resources: They include machine, building, and production capacity.
- Human resources: They include the knowledge, skill, experience and commitment of the human factor in an organization.
- Financial resources: They include availability of sources of finance, capital structure, ability to use alternative financial strategies, and relationship with the financial institutions.
- Intellectual resources: They include patent right, brand loyalty, business system, and customer database.
- Threshold resources: They are the fundamental resources. Without these resources, an organization cannot operate smoothly. They are essential to exist and compete successfully in the market. Development of these resources over a long period of time is very essential for the sustainability of a business.
- Unique resources: The resources that are critical for gaining competitive advantage are called unique resources. They are related to critical success factors. They are developed over a long period of time. They enable an organization get opportunity and mitigate threats. Unique resources are valuable, non-substitutable, costly to imitate and rare. They increase value on the product. The unique resource are normally embedded with human resources.
2. What do you mean by resources? Write about strength and resource capability.
Resources may be defined as the sum of asset (both tangible and intangible) that an organization uses to perform the activities effectively. Tangible resources are assets that can be observed and quantified. They are physical as plant, labour, and finance. The intangible assets are information, reputation and knowledge. Intangible resources include assets that are rooted deeply in the firm’s history, accumulated over time, and are relatively difficult for competitors to analyse and imitate. Resources serve as the input in production process. Resource availability and allocation are very important in strategic management. They provide strength and enable exploitation of opportunities. In this way, resources help gain sustainable competitive advantage and achieve long-term objectives. They enhance organizational capabilities.
Strength and Resources Capabilities
Strength is the basic capability which an organization can use to gain strategic advantages over its competitors. Knowing its strength, an organization formulates its strategy and enters into the competitions. Understanding strength is recognizing the weapons likely to be used to defeat the competitors. So, analysis of strength is inherent requirement of an organization for its success.
Resource capabilities refer to an organization’s ability to exploit its available resources such as marketing, operation, human resource, finance and accounting, or intellectual capital. Organizational strength is the result of resource capabilities. Organizational performance is the function of resources and capabilities. Resources are the foundation of organizational capabilities. Over the time, capabilities become stronger and become difficult for the competitors to understand and imitate. If the resources and capabilities are rare, valuable, costly to imitate and non-substitutable, they become sources of competitive advantage.
Long Questions Answer
1. What is core competency? How does it build strategic advantage? Write.
Definition of Core Competency
A core competency is a collection of competencies that crosses divisional boundaries, is widespread within the corporation, and is something that the corporation can do exceedingly well. Thus, new product development is a core competency if it goes beyond one division. A core competency may be expertise in door-to-door selling. Core competency is the other source of sustainable competitive advantage. Competencies are special qualities possessed by an organization that make them withstand the pressure of competition in the marketplace. Core competency lies on unique resources, core capabilities, invisible assets, embedded knowledge and so on.
Core Competency to Build Strategic Advantage
Core competencies are the organization’s most important sources of competency is competitive advantage. They drive the selection of strategies. Hence, it is central to strategy and competitiveness. Normally, a core knowledge based, residing in people not in the balance sheet. It can be related to the following.
- Expertise in integrating multiple technologies to create a new product.
- In cost efficient supply chain management
- Expertise in after sales service
- Skills in manufacturing high quality products at low cost
A core competency is the outcome of a cross departmental combination of knowledge and expertise rather than a single department or work group.
When core competency is superior to those of the competitors, it is called distinctive competency. It indicates a greater proficiency than a core competency. A distinctive competence is competitively an important resource strength for three reasons.
- It gives companies a competitively valuable capability that is unmatched with competitors.
- It has the potential of being the cornerstone of the company’s strategy.
- It can produce the competitive edge in the marketplace since it represents a level of proficiency that is superior to rivals.
Strategic advantage is the capability of an organization to outperform its key competitors over a long period of time. It is the result of the combination of unique resources and core competencies. In other words, if the unique resources are deployed for creating core competency, an organization can build the capabilities that can beat the competitors. Strategic advantage is the ability to stay ahead of present or potential competition. Hence, superior performance achieved through competitive advantage ensures market leadership. The interaction between resources held by a firm and business strategy have a profound impact on generating competitive advantage.