Significance of Resources to a Firms Success - Essay Example

Topic: Lecturer: Presentation: Introduction Resources are significant for accomplishment of organizational goals. A business requires diverse resources to be competitive in the market. They also have to be consistent in regard to their availability to avoid shortages of the production inputs. On the other hand, resources need to be difficult to substitute or imitate so that other organizations may not be in a position to use similar resources to acquire a competitive advantage. These resources include assets such as premises, employees, the processes for production, finances, and overall capabilities among other resources that facilitate production and the organization’s competitive advantage. On the other hand, strategic response involves the organization’s actions that are undertaken to maintain productivity in an operating environment that is highly competitive. This paper presents a critique of the proposition that firms succeed because of the resources under their control rather than because of their strategic response to the competitive environment. Significance of Resources to a Firm’s Success A firm that has success to sufficient resources is capable of maintaining a competitive advantage. For example, the availability of skilled workers helps a business to remain competent. If it is able to maintain a satisfied workforce, than competing companies, the firm’s productivity is maintained. On the other hand, skilled workers need to be provided with the necessary resources for them to perform effectively (Housden, 2006 p 56). Many organizations fail as a result of their failure to facilitate employees to utilize their talents and skills and exploit their potential to the fullest. For example, employees with a potential for research and development can not be useful to the organization if they are not facilitated with the appropriate resources. A business with sufficient resources is likely to succeed in the long run especially due to the fact that it is able to utilize emerging opportunities. Such a business is likely to be competitive because they are capable of adopting emerging inventions in the market before competitors with meager resources. For example, if a new technology for production is realized, an organization with ample space and finances can set up a pilot project to run concurrently with the existing production system. This allows the firm to have sufficient time to test the applicability of emerging inventions; hence it can not incur heavy losses. On the contrary, a firm that operates with meager resources either replaces the existing technology with emerging technology or fails to adopt it because of insufficiency. It can incur losses in adopting a new technology that it has not tested, while on the other hand it may fail to utilize the available opportunities to improve its competence. Such organizations have to wait until the new technology works for them to adopt it, a practice that leads to low market share since by the time the new technology is adopted other competitors will have succeeded in establishing a large market share (Bateman & Snell, 2007 p 43). Ample resources are also significant in promoting a competent organizational culture such as organizational learning, engagement in corporate social responsibility, performance and reward management among other organizational practices that improve the competitiveness of an organization. For example, promoting vocational learning amongst employees improves their competitiveness, thereby making them capable of contributing to the accomplishment of organizational goals. Without sufficient finances, this can not be accomplished. Performance management and employee motivation through an effective reward system can not be accomplished without enough resources. Availability of sufficient resources is therefore important for the success of a firm. However, in spite of the significance of sufficient resources, strategic response to the competitive environment can not be ignored. Resources alone may not fulfill all the necessary requirements for the success of a business (Hannagan, 2007 p 51). Strategic Response to the Competitive Environment In the life of an organization, there are constant threats that result from rising competitiveness as each firm strives to accomplish a larger market share than the others. This generates competition in the operating environment that necessitates strategies to maintain a firm’s competitiveness. Since each firm is continuously focusing on maintaining and expanding its market share, yet the market is open for emerging competitors, strategic response to competition in the business environment is critical to the success of the firm. An organization has to increase its inputs and also set strategies to make them improve its competitive advantage. In this view, it is not only the resources that matter. Rather, the firm has to be capable of developing strategies to ensure that resources satisfy the organizational objectives (Hannagan, 2007 p 66). An example of a competitive environment is when a competing organization lowers the prices of commodities; consumers may tend to prefer the cheaper commodities. Under such circumstances, a strategic response is needed to improve the organization’s effectiveness. It may not lower the prices of commodities since such an option may lead to a reduction in profits. The firm may choose from a range of strategic responses such as value addition to the commodities to increase customer preference. Another strategic response would be to produce more differentiated products for customers to have a wide variety to choose from. This would help in maintaining customers without incurring losses through lowering prices. Such response strategies put a firm at a strategic position whereby for other organizations to be competitive, they have to meet the value that the organization has sett for the customers (Housden 2006 p 61). Strategic response is usually a continuous process that involves a decision making and analyzing a firm’s strengths and weaknesses, opportunities and threats in the market. In many situations, a firm needs to capitalize on its strengths and take opportunity of the competitor’s weaknesses (Constantinides, 2006 p 408). For example, a competitor may be operating with a large market share because of easy access of raw materials, hence reduced prices. A new firm can set response strategies to cope with the competitive market by engaging in corporate social responsibility practices that are beneficial to its consumers, which is a strategy that the competing organization may not have adopted. If the competitor afterwards adopts such a strategy, consumers will assume that it is an imitation. A firm has also to respond to threats if it is to be successful in its operations through strategic response. Response strategies such as ensuring that the organization is capable of coping with threats of imitation and counterfeit are important for its success. In general, strategic response to the competitive environment is important in maintaining the organization’s competitiveness and success. Conclusion For an organization to be competitive in the market, it is important for resources to be easily accessible. These are useful for the business especially in the utilization of emerging opportunities. Firms with meager resources under their control are unlikely to expand their operations. They are also unable to effectively utilize the potential of their employees since they can not support essential practices such as research and development. However, the success of a firm does not only lie in the available resources. Rather, strategic response to the competitive environment is also significant for the business to be in a capacity to cope with the challenges that are likely to be a threat to its competitiveness. On the other hand, strategic response is also significant in ensuring that the business is able to utilize the emerging opportunities, as well as taking advantage of the competitor’s weaknesses in the market. In general, for a firm to succeed, it needs to have sufficient resources as well as be capable of setting important strategies to cope with the competitive environment. Bibliography 1. Constantinides, E. 2006. “The Marketing Mix Revisited: Towards the 21st Century Marketing”, Journal of Marketing Management, Vol. 22,3 pp 407 – 438 2. Bateman, T. S. & Snell, S. 2007. Management: Leading and Collaborating in a Competitive World, McGraw - Hill. 3. Hannagan, T. 2007. Management: Concepts and Practices, Prentice Hall. 4. Housden, M. 2006. CIM Course book Marketing Research and Information, Butterworth-Heinemann. Read More