Resourcing - Resource Management Related Issues

Obtaining the resource and Protecting the resource.


Step 1: Obtaining the resource




Traded  resources



Mathews (2003) identifies three steps in the process of strategic resource acquisition: search, acquisition and absorption. Mathews (2003)  principally discusses the external acquisition of technology and know-how and  absorption is the most demanding phase of the whole process and requires the firm to possess the capabilities to integrate the resource (new technology) with the firm’s existing resource base. Cohen and Levinthal (1990) suggest that the firm’s absorptive capacity is largely a function of the firm’s level of prior related knowledge. In consequence, even when markets for resources exist, incumbents are somehow protected from competition by firms that do not use the same resources (in particular technologies) because these firms will find it difficult to absorb the resources they might acquire on the markets.

To be source of competitive advantage for its buyer a resource traded on a market must generate rents that the firm is able to appropriate. This will be the case when the firm purchases the resource for less than its marginal productivity when used in combination with the firm’s stock of other resources (i.e. resource cospecialization, synergies and complementarities increases the resource marginal productivity). When the resource price is above the firm’s reservation price, the firm may turn to internal resource creation. The firm will be able to purchase the resource for less than its marginal productivity when it possesses superior information, has bargaining power on the resource supplier or is lucky.


The firm may choose to build the resource internally when no market for the resource exists
or when external resource acquisition is more costly than resource building. Mathews (2003),
who sees external resource acquisition as an important strategic option, compares the
potential competitive advantages and disadvantages of external sourcing with those of internal
resource building. He shows how the features of the resource accumulation process (time
compression diseconomies, asset mass efficiencies, asset stock interconnectedness, prevention
of asset erosion and causal ambiguity) may favor the internal development of resources. According to Dierickx and Cool (1989), some factors may favor the internal development of resources, but it may turn to be competitive disadvantages in some circumstances.

Competition to be first may be an important competition process when the firm that develops
first the resource can get it protected by property rights or when first-mover advantages are
significant (e.g.. learning and network effects).


Step 2: Protecting the resource

Once a firm has acquired or built a new resource, it deploys the resource in order to make it contribute to the firm’s competitive advantage. Sooner or later competitors in the product market perceive the change in the firm’s competitive advantage and wonder about its source. When competitors have been able to identify which new resource the firm has acquired or built they may consider imitating  the resource or the resource functionality through acquisition or internal building.

However, the firm’s resource or the bundle of resources in which it is integrated may be
protected by barriers to imitation. A barrier to imitation, also called isolating mechanism,
barrier to resource mobility and resource protection barrier, is a phenomenon that restrains or
obstructs imitation by competitors (Reed and Defillippi, 1990). The isolating mechanisms were discussed by Rumelt, 1984; Ghemawat, 1986; Dierickx and Cool, 1989. Some of these mechanisms are discussed here.  Causal ambiguity regarding the source(s) of competitive advantage prevents competitors from knowing exactly what to imitate and how to do it. Even if competitors have been able to identify the source(s) of the firm’s competitive advantage, imitation may be costly to carry on or to carry on rapidly. Isolating mechanisms which make imitation costly for competitors are superior
access to resources or customers (e.g. reputation and buyer switching costs), minimum efficient scale large relative to market demand, intangible barriers to imitation (causal ambiguity, dependence on historical circumstances and social complexity), and strategic fit. Imitation in the short-term may be costly because of barriers to imitation such as legal restrictions  (patents, copyrights, trademarks, and government control over enry into markets) and diseconomies of time compression. In addition to protecting the firm’s resources early-mover advantages are isolating mechanisms that increase the economic power of the first-mover’s competitive advantage over time. Besanko, Dranove and Shanley (2000) present four isolating mechanisms that fall under this category: learning curve, network externalities, reputation for quality in the sale of experience goods, and buyer switching costs. Imitation is a competition process. Barriers to imitation will have different height for
different competitors because of factors such as the competitors’ competitive aggressiveness


 All isolating mechanisms erode over time, the firm must invest to maintain the barriers that protect its resources.


Besanko, David, Dranove, David and Shanley, Mark, Economics of Strategy, 2000, USA,
John Wiley & Sons, Inc.

Cohen, Wesley and Levinthal, Daniel, “Absorptive Capacity: A New Perspective On
Learning And Innovation”, Administrative Science Quarterly, March 1990, Vol. 35, No. 1,
128-152.

Dierickx, Ingemar and Cool, Karel, “Asset Stock Accumulation and Sustainability of
Competitive Advantage”, Management Science, 1989, Vol. 35, No. 12, 1504-1513.

Mathews, John, “Strategizing by firms in the presence of markets for resources”, Industrial
and Corporate Change, 2003, Vol. 12, No. 6, 1157-1193.

Reed, Richard and Defillippi, Robert, “Causal Ambiguity, Barriers to Imitation, and
Sustainable Competitive Advantage”, The Academy of Management Review, 1990, Vol.
15, No. 1, 88-102.

Rumelt, Richard, “Towards a strategic theory of the firm”, in Lamb, R., (Ed.), Competitive
Strategic Management, Prentice-Hall, 1984, Englewood Cliffs (NJ).

Rewrite once again.

Management by Values

Management by Values (MBV) differentiates between three terms: vision, mission and other operating values.

Every company should have explicitly defined two important groups of values or shared principles.

1. The basic values associated with its vision (Where are we going?) and its mission (What for? or Why does the company exist?).

2. The instrumental or operating values associated with the organization's way of thinking and way of doing things to meet the challenges of  understanding market, new product development, producing and selling.


The differentiation between basic or final values and operating values: The basic values give meaning and cohesion to the collective effort to move the company towards where it wants to go in the long-term. They clarify the reason for its existence,  the kind of business it wants to become, the differentiation that it will provide, any. Every business company has a double mission: one economic and , the other social; the second depends clearly on the first. The economic mission  is to earn revenues and distribute the share of partners in business in timely way and retain the profit. The social mission expresses the supply of specific products or services to the society and take care of other social obligations that demand that it takes care of the people involed in its business activities on the supply and distributive sides.

The operating value determine or define its "operating culture". They are the explicit principles of action that regulate the daily conduct of individual employees in their work to achieve the vision and mission of the company. Some examples include: mutual trust, customer satisfaction, honesty, teamwork, etc.


Construction of new beliefs and values as the foundation of new structures, new processes and new
human resources policies:

Managers have to "think through" what new beliefs and values must underpin the new organization structures, new internal processes (including introduction of new technologies), new colleagues (recruitment) new human resources policies (selection, compensation, training, etc.).

MBV helps the leadership in constructing a collective sense of what the company "should be", and some freely chosen and accepted "rules of the game", to channel future action. In this way, MBV provides a way for effecting transformation and introducing coherence, across the length and breadth of the company.

MBV proposes the need to manage values, to guard them as the scarce resources they undoubtedly are. Managing values means managing the culture (behavior, artifacts, values and beliefs) of the company, strengthening it day by day and always revitalizing it, to face the unknowns of the future.


In today’s ever-increasing globalized, complex, chaotic and fast-changing world, leaders need to develop and enshrine an organizational culture based on shared values.  The values have to be selected from the bedrock of mankind and distilled by millennia of the human civilizing experience

Dolan and colleagues (Dolan et al., 2006; Dolan et al., 2008; Dolan, 2011) proposed that the set of values followed by an organization has to be a combination of three facets (or axes):
1) economicpragmatic values;
2) ethical-social values;
and 3) emotional-developmental values.


• Economic-Pragmatic Values: This group of values are necessary to sustain the various organizational subsystems by allowing them to participate in the production-consumption system. Encompassing efficiency, performance standards and discipline etc. these values guide such activities as planning, directing and controlling.

• Ethical-Social Values emerge from norms and mores as to how people should conduct themselves in public and at work and go about their personal and professional relationships. Values such as honesty, integrity, respect and loyalty belong to this group.

• Emotional-Developmental Values create impetus for action. These values are related to intrinsic motivation: optimism, passion, perceived freedom, satisfaction and happiness are a few examples of such values. Deficiency in these values hinder involvement and and organizational commitment.

Simon L. Dolan and Yochanan Altman (2012) in Managing by Values: The Leadership Spirituality Connection, advocated that the fourth axis of spiritual dimension has to be added to three groups of values.


The task of an effective leader is to select the value set that is aligned with the mission and vision of the organization and manage so that they become shared values. Leader has the ability to influence his followers but he has to use his influence in a rational way and emotional way so that the followers achieve their economic and emotional needs under his guidance as an organization.

Practicing MBV

MBV is a process for making lasting, positive performance improvements impacting their culture, strategy, processes and people.

DEFINING VALUES

Leaders have to define the values for their organization first. Vaues become the basis for decision-making and action/behavior in the organization.

COMMUNICATING VALUES

Values have to be communicated and articulated. Everyone becomes informed about the organization’s mission, vision, values and aspirations—including their importance. This may include formal and informal meetings, resource materials for individuals and printed communications. Most important is the examples set by the leaders of the organization in living the values being communicated.

ALIGNING VALUES

This step takes lot of effort and time.  Behavioral rountines that reflects the values have to be developed and the members of the organization have to be provided opportunities to exhibit the recommended behavior through role plays and actual situations. Monitoring by the leaders to identify the deviations and to correct the deviations has to be done and this responsibility is to be given more and more people so that organization wide monitoring of value reflecting behavior becomes the norm in the organization.

Management by Value has to result in behaviour change to give results.




References

Dolan, Simon L. and García, Salvador, Managing by Values in the Next Milenium: Cultural Redesign for Strategic Organizational Change (June, 2000). Available at SSRN: http://ssrn.com/abstract=237628 or http://dx.doi.org/10.2139/ssrn.237628


Managing by Values: A Corporate Guide to Living, Being Alive, and Making a Living in the 21st Century
S. Dolan, S. Garcia, B. Richley
Springer, 28-Jul-2006 - Business & Economics - 236 pages


This book develops a new framework, Management by Values (MBV), for strategic and competitive advantage. Through its step-by-step guide to implementation, it serves as a necessary strategic leadership tool whose practical application will mine market potential through its relevance to individual organizational members.
https://books.google.co.in/books?id=AdXrBNp0mlUC

Simon L. Dolan and Yochanan Altman (2012), "Managing by Values: The Leadership Spirituality Connection", PEOPLE & STRATEGY, Volume 35/Issue 4

MBV Consultant
http://www.hopenn.com/company/managing-by-values/

Managing by Values
Kenneth H. Blanchard, Michael J. O'Connor, Jim Ballard
Berrett-Koehler Publishers, 1997 - Business & Economics - 154 pages


Today's business world is characterized by increasing change - technological, cultural, social, economic, and personal - the net effect of which is increasing anxiety, insecurity, and more pressure than perhaps ever before on today's employees, managers, and business owners. Managing By Values provides a practical, proven new solution for addressing these issues. Blanchard and O'Connor provide a framework for stability, continuity, and growth in the midst of these challenges. Written in the simple, direct story format that has become a trademark of Ken Blanchard's previous books, Managing By Values builds on the mass of diverse research, experiences, and literature on organizational, group, and individual performance and satisfaction. Based on the authors' research and applied real-world experience with client organizations, Managing By Values provides a practical, proven approach for how to give your organization the gift of a promising future while also discovering a way for all of its stakeholders to be satisfied in the process.
https://books.google.co.in/books?id=G-wYcokcKn8C

Productivity Orientation

As a result of these technological and cultural trends, consumers are constantly concerned with being productive, making progress, and accomplishing more in less time—a tendency that we label “productivity orientation.”
Productivity Orientation and the
Consumption of Collectable Experiences
ANAT KEINAN and RAN KIVETZ
JOURNAL OF CONSUMER RESEARCH, Inc. ● Vol. 37 ● April 2011



Jun Ye , Jesse King , (2016) "Managing the downside effect of a productivity orientation", Journal of Services Marketing, Vol. 30 Iss: 2, pp.238 - 254

Findings
The authors find evidence of a trade-off when a productivity orientation is adopted. A productivity orientation improves frontline service employee productivity performance but indirectly harms quality performance and job satisfaction. The authors find further evidence that trust in management helps to mitigate these negative effects.

This paper suggests that a productivity orientation must be managed carefully.
http://www.emeraldinsight.com/doi/abs/10.1108/JSM-10-2014-0351

Strategic Marketing Capabilities

Strategic marketing capabilities are the firm’s capabilities involved in sensing and
relating  to the market. Firms with strong strategic marketing capabilities  (a) acquire, develop and use market information to serve their market and (b) perform activities to connect to the  key customer and channel partners.


The strategic marketing capabilities construct include the following six categories:
(1) customer-driven capabilities,
(2) competitor-driven capabilities,
(3) supplier-driven capabilities,
(4) technology-monitoring capabilities,
(5) customer-relating capabilities and
(6) supplier-relating capabilities.

As a broad classification the first four components are a part of market-driven capabilities and customer-relating and supplier-relating capabilities are a part of market-relating capabilities.

Evaluating a Company’s External Environment - Summary and Key Points

Crafting and Executing Strategy: Concepts and Readings

20TH EDITION

By Arthur Thompson and A. J. Strickland III and John Gamble
Copyright: 2016, Mcgraw Hill
Publication Date: January 19, 2015

Observing, studying and analyzing company's external situation involves probing for answers to the following seven questions. These seven questions form the strategic analysis of external environment which is essential to develop effective strategy.

Does the industry offer attractive opportunities for growth? 

Identifying the industry's basic economic features and growth potential sets the stage for the analysis to come, since they play an important role in determining an industry's potential for providing sales revenue and profits. Industries differ significantly on such factors as market size and growth rate, geographic scope, life-cycle stage, the number and size of competitors,  industry capacity, and other conditions that describe the industry's demand-supply balance and opportunities for growth.

What kinds of competitive forces are industry members facing, and how strong is each force? 

This analysis examines: (1) competitive pressures exerted by industry rivals, (2) competitive pressures created by the sellers of substitutes, (3) Threat of new entrants into the market, (4) supplier bargaining power, and (5) buyer bargaining power. The nature and strength of the competitive pressures have to be examined force by force and their collective strength must be evaluated. Porter's five-forces model forces strategy makers to assess competitive forces and come out with ideas of capturing or growing market share in the presence of the competitive forces. How do you neutralize the competitive force and gain your market share and profit is determined in the competitive force analysis.

What factors are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability? 

Industry and competitive conditions change because due to industry's macro-environment and changes originating within the industry. Such changes include: increasing globalization, changing buyer demographics, technological change, Internet-expansion, product and marketing innovations, entry or exit of major firms, diffusion of know-how, efficiency improvements in adjacent markets, reductions in uncertainty and business risk, government policy changes, and changing societal factors. Once an industry's change drivers have been identified, the analytical task becomes one of determining  the effect on of them industry growth and competition.

Are the change drivers causing demand for the industry's product to increase or decrease?
Are they acting to make competition more or less intense?
Will they lead to higher or lower industry profitability?

What market positions do industry rivals occupy—who is strongly positioned and who is not?

Strategic group mapping is a valuable tool for understanding the similarities, differences, strengths, and weaknesses inherent in the market positions of rival companies. Rivals in the same or nearby strategic groups are close competitors, whereas companies in distant strategic groups usually pose little or no immediate threat. The profit potential of different strategic groups varies due to strengths and weaknesses in each group’s market position. Often, industry competitive pressures and change drivers favor some strategic groups and hurt others. A strategic group analysis can be done to select the most profitable and suitable strategic group in which the company wants to enter, or even shift. The second use is that of creating a competitive strategy within the strategic group.

What strategic moves are rivals likely to make next? 

Competitor intelligence is collected to  anticipate their actions and take effective counteraction. Managers have to take rivals' probable actions into account in designing their own company's best course of action. Managers who fail to study competitors and know their strategies, risk being caught unprepared by the strategic moves of rivals.

What are the key factors for competitive success? 

An industry's key success factors (KSFs) are the strategy elements, product attributes,   and capabilities that all industry members must have in order to survive and prosper in the industry. KSFs vary by industry and may vary over time as well.

For any industry, KSFs can be deduced by answering three basic questions:

(1)Customer related - On what basis do buyers of the industry's product choose between the competing brands of sellers,

(2) Competition related - what resources and competitive capabilities must a company have to be competitively successful, and

(3) Weaknesses -  what shortcomings are almost certain to put a company at a significant competitive disadvantage?

Correctly diagnosing an industry's (KSFs) raises a company's chances of crafting a sound strategy.

What is the outlook for the company in the industry with the present strategy?  

Analysis of economy and industry analysis has to be summed to provide a forecast of performance of the company with the present strategy.  Clearly, insightful diagnosis of a company's external situation is an essential first step in crafting strategies that are well matched to industry and competitive conditions.

To do cutting-edge strategic thinking about the external environment, managers have to use analytical tools to answer the relevant questions.

Analytical Tools

PESTEL Analysis

Competitive Weapons for Increasing Market Share

Discounts, Clearance Sales
Offering discounts through coupons
Improving warranties
Offering attractive financing terms
Building a bigger and better dealer network
Increasing Advertising
Innovating and increasing product features and benefits
Innovating and improving quality so that external failures are minimum
Innovating and reducing cost and decreasing the price
Increasing the number packsizes, flavours, styles etc. so that customer gets a bigger choice
Increasing the customisation of the product or service

What weapons are being used by competitors?

What Is Strategy and Why Is It Important? - Summary and Important Points

What Is Strategy and Why Is It Important?

Chapter 1 of
Crafting and Executing Strategy: Concepts and Readings

20TH EDITION

By Arthur Thompson and A. J. Strickland III and John Gamble
Copyright: 2016, Mcgraw Hill
Publication Date: January 19, 2015


The tasks of crafting and executing company strategies important for a business enterprise to win in the marketplace by getting an economic market share and produce and deliver the goods or services demanded at profit to the organization.

A company's strategy is the plan management is using to identify a favorable market position, conduct its operations, attract and please customers, compete successfully, and achieve the desired performance targets.

The central thrust of a company's strategy is undertaking marketing and operations moves to build and strengthen the company's long-term competitive position and financial performance by undertaking value chain activities differently from rivals so that customers are attracted to its offerings and thus provide a  sustainable competitive advantage over competitors.

A company achieves a sustainable competitive advantage when it can meet customer needs more effectively or efficiently (at lower cost and price) than rivals and when the basis for this is durable, despite the best efforts of competitors to match or surpass this advantage.

A company's strategy typically evolves over time, emerging from a blend of (1) proactive and deliberate actions on the part of company managers to improve the strategy and (2) reactive, as-needed adaptive responses to unanticipated developments and actions by customers and competitors.

A company's business model is management's estimate of revenues and costs that indicates  profit. It contains two crucial elements: (1) the customer value proposition —a plan for satisfying customer wants and needs at a price customers will consider good value, and (2) the profit formula —a plan for a cost structure that will enable the company to deliver the customer value proposition profitably. In effect, a company's business model sets forth the economic logic for making money in a particular business, given the company's current strategy. Both demand estimates and cost estimates have to satisfy the theories of economics in the area of consumer or business demand and production/productivity economics.

A winning strategy will pass three tests: (1) Fit (external, internal, and dynamic consistency - It satisfies all stakeholders and all constraints of the company resources and market demand), (2) Competitive Advantage (durable competitive advantage), and (3) Performance (outstanding financial and market performance).

Crafting and executing strategy are core management functions of top management of a company. How well a company performs and the degree of market success it enjoys are directly attributable to the caliber of its strategy and the strategy is execution of the strategy. Strategy is a plan and is the primary step of top management. Execution phase consists of the next four steps of management organizing, resourcing, execution (allocation or resources, directing and leadership) and control.  

Values of Business Schools

Melbourne Business School -  Mission, Vision & Values

OUR MISSION
We enable individuals and organisations to be global leaders through the creation, application and dissemination of business and economics knowledge.

OUR VISION
Our aspiration is to become one of the leading global providers of business and economics education and research.
We aim to critically evaluate and influence policy design, corporate governance, and business practices to secure the best possible outcomes for our stakeholders and for the broader societies in which we operate.

OUR VALUES
We are a non-discriminatory learning community in which there is respect for our diverse backgrounds and interests and where there is a shared joy in learning and scholarship.
Rigour and relevance are the foundations of all that we do.
Integrity and ethical behaviour guide all of our actions, policies and decision making.
Openness and transparency characterise our organisational culture.
Academic freedom is paramount.
http://mbs.unimelb.edu.au/our-mission-vision-and-values

Olin Business School - Mission and Values

​Mission
We live our mission everyday. Since our founding in 1917, Olin Business School has been guided by these words: Create knowledge. Inspire individuals. Transform business.

Core Values

Excellence: We have an unwavering commitment to excellence in all that we do, continually striving to provide the highest level of educational experience, learning opportunities and research.

Leadership: Olin cultivates a leadership mind-set, infusing students with both the value of acting responsibly and the desire to make an impact in whatever path they pursue.

Integrity: Our Midwestern heritage is the cornerstone of our character – we are honest, hard working, authentic, loyal and supportive.

Collaboration: Our culture fosters a collaborative community that creates innovative ideas, unique opportunities, and strong personal bonds.

Diversity: We embrace the diversity of individuals, cultures, ideas, and opinions for the richness it brings to our school.

The UNC Kenan-Flagler:  Core Values

The UNC Kenan-Flagler community lives by its core values: excellence, leadership, integrity, community and teamwork.

Excellence

We, the members of the UNC Kenan-Flagler community, strive for the very highest standards in everything that we do. We challenge each other to produce important new knowledge at the leading edge of our disciplines, to create an intellectually rigorous learning environment and to show uncompromising dedication to those we serve.

Leadership

Leadership Development: We offer the best, most comprehensive leadership program of any top business school.
UNC Kenan-Flagler Faculty: The thought leadership of UNC-Kenan Flagler professors is recognized in both academic and corporate circles and makes an impact on the practice of business. R.O.I. Magazine, a school publication, features UNC Kenan-Flagler experts.

Integrity

We cultivate an environment of honesty, sincerity and trust in which we hold ourselves to the highest ethical standards. We believe integrity is the foundation of all moral character and is an essential trait for truly successful professional and personal lives.

Required Ethics Course: While other schools offer ethics courses as an elective, all UNC Kenan-Flagler MBAs take ethics during their first year as part of the required curriculum.
Graduate Honor Court: The business school joins the graduate and professional programs of law, dentistry, pharmacy and medicine with its own student-run honor court.

Community

From its earliest days, UNC Chapel Hill has honored and cherished its special responsibility to serve the people of North Carolina. We at UNC Kenan-Flagler extend this notion of responsibility to include service to the nation and the world through research, teaching and community leadership.

Teamwork

We create at UNC Kenan-Flagler a unique atmosphere of collaboration, mutual support and genuine interest in each other's success. Our diverse mix of cultures, races and experiences provides a variety of perspectives and talents that, when united through teamwork, strengthens our ability to achieve our goals.

http://www.kenan-flagler.unc.edu/about/core-values

University of Leeds Business School - Mission - Values

Our Mission is to make an exceptional impact on business and society globally through leadership in research and teaching.

Professor Peter Moizer, Dean of Leeds University Business School


We Are International
Create knowledge. Make an impact.


Research

To produce and disseminate research of world-class quality, within the School and through international partnerships, which increases knowledge, skills, understanding and impact.

Student education

To enable individuals to develop their academic potential, their employability, their global and cultural insight and their ethical awareness to enhance their potential to benefit business and society.


http://business.leeds.ac.uk/about-us/mission-and-values/