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Accounting & Financial Management
AFM 331
Nancy Vanden Bosch

AFM331 – June 11 Class Notes Resource Analysis: The Strategy-Resource Linkage Figures 3.1, 6.1, 6.2, and 6.3 are from Strategic Analysis and Action (7 edition), by Crossan, Rouse, Fry, and Killing AFM331 – June 11 Class Notes Resource Analysis: The Strategy-Resource Linkage The Nature of Resources Broad Characteristics of Resources • Distinctive competenciesare core activities that a business can dobetter than competitors; should seek to exploit these and avoid initiatives that have no relationship to what business is good at doing • Core skills are collective skills accumulated by management or team as they work together over time; difficult to develop and hard to copy, so use them to create and evaluate new initiatives • Core competenciesare skills possessed by a business that underlie whole range of products and business units • Firms should attempt to leverage their current competencies as much as possible Specific Characteristics of Resources • Resources provide business with potential to act • Adequacy of a resource is relative to the demands of your strategy (compare to competitors as well) • Certain resources are easier to augment or adapt to meet strategic needs than others • The value of particular resources tends to be context specific, and some are more transferrable to new applications than others (e.g., some resources have a value of zero outside of their specialized use) Resources and Competitive Advantage For resource to offer CA, it must possess the following characteristics (each one building on the preceding items)in the context of the strategy the business is pursuing or intends to pursue: • Valuable: Do the firm’s resources andcapabilities enable it to respond to environmental threats or opportunities? • Rare: How many competing firms already possess specific, valuable resources and capabilities? • Inimitable: Do firms without a resource face a cost disadvantage in obtaining compared to firms that already possess it? • Organized appropriately: Is the firm organized to exploit the full competitive potential of its resources and capabilities? AFM331 – June 11 Class Notes Resource Analysis: The Strategy-Resource Linkage The Dual Role of Resources The Constraining Role • Inadequate resources may prevent a firm from pursuing strategic proposals that make sense in light of the external environment • If there is a constraint, consider how long it would take to develop or acquire needed resources • Also consider how you may modify the strategy to take advantage of resources that are available • Don’t want to stretch resources too thin, nor
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