1.Strategic management
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• What are my business’s objectives?
• What are the best ways to achieve those
objectives?
• What resources are required to make that
happen?
objectives can have several
phases:
• Assessing the landscape within which the company will
operate, and formulating how the company sees its
role within that landscape.
• This is commonly known as a mission statement.
• Establishing objectives to answer : a long- and shortterm view of what the company can offer.
• This is commonly known as a vision statement.
• Stipulating the goals the company has for itself, both in
terms of financial and strategic objectives.
2. How best can we reach our
goals?”.
• Phase two of successful strategic management is formulating a plan
by which the company can accomplish what it sets out to do
• Within this phase, a chain of command should be put in place,
pairing individuals with the right skills, knowledge, and
experience with the business’s needs and objectives.
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From there, responsibilities for processes and tasks should be
distributed across the full chain of command, delegating work to
teams and individuals so that they company’s goals can be attained
through the combined efforts of all employees.
• This includes communicating responsibilities and deliverables
(what needs to be done, and how the results of those tasks will be
measured).
unforeseen results
• Strategic management is not a static process
that can be limited to a linear process.
• Strategic managers must be able to respond to
occurrences that cannot be predicted.
• Effective strategic management - to move
quickly in response to new challenges, and
replace ideas and practices with processes that
can help meet new needs as they present
themselves.
Strategic management
• Strategic management is a level of managerial activity under setting
goals and over Tactics.
• Strategic management provides overall direction to the enterprise
and is closely related to the field of Organization Studies.
• In the field of business administration it is useful to talk about
"strategic alignment" between the organization and its
environment or "strategic consistency."
• According to Arieu (2007), "there is strategic consistency when the
actions of an organization are consistent with the expectations
of management, and these in turn are with the market and the
context."
• Strategic management includes not only the management team
but can also include the Board of Directors and other stakeholders
of the organization. It depends on the organizational structure.
Strategic management
• is an ongoing process that evaluates and controls the
business and the industries in which the company is
involved; assesses its competitors and sets goals
and strategies to meet all existing and potential
competitors; and then reassesses each strategy annually
or quarterly to determine how it has been implemented
and whether it has succeeded or needs replacement by
• a new strategy to meet changed circumstances, new
technology, new competitors, a new economic
environment., or a new social, financial, or political
environment.”
Concepts/approaches of strategic management
• The specific approach to strategic management can depend upon
the size of an organisation, and the proclivity to change of its
business environment.
• These points are highlighted below:
• A global/transnational organisation may employ a more
structured strategic management model, due to its size, scope of
operations, and need to encompass stakeholder views and
requirements.
• An SME (Small and Medium Enterprise) may employ an
entrepreneurial approach. This is due to its comparatively smaller
size and scope of operations, as well as possessing fewer
resources.
• An SME's CEO (or general top management) may simply outline a
mission, and pursue all activities under that mission.
Strategic management
• It entails specifying the organization's mission, vision
and objectives, developing policies and plans, often
in terms of projects and programs, which are designed to
achieve these objectives, and then allocating
resources to implement the policies and plans,
projects and programs.
• A balanced scorecard ( hodnotiaca karta)is often used
to evaluate the overall performance of the business
and its progress towards objectives ( pokrok k cieľom)
• Recent studies and leading management theorists
have advocated that strategy needs to start with
stakeholders expectations and use a modified balanced
scorecard which includes all stakeholders.
Vision and mission statement
• Organizations sometimes summarize goals and
objectives into a mission statement and/or a vision
statement.
• Others begin with a vision and mission and use them to
formulate goals and objectives.
• A Mission statement tells you the fundamental
purpose of the organization. It defines the customer
and the critical processes.
• A Vision statement outlines what the organization
wants to be, or how it wants the world in which it
operates to be. It concentrates on the future. It is a
source of inspiration. It provides clear decision-making
criteria.
Mission statemenet
• A written declaration of an organization's core
purpose and focus that normally remains
unchanged over time.
• Properly crafted mission statements serve as
filters to separate what is important from what
is not,
• clearly state which markets will be served and
how, and communicate a sense of intended
direction to the entire organization.
• Also called company mission, corporate
mission, or corporate purpose
Mission statement
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Effective mission statements commonly clarify the organization's
purpose.
Commercial mission statements often include the following information:
Purpose and aim(s) of the organization
The organization's primary stakeholders: clients/customers,
shareholders,
How the organization provides value to these stakeholders, for example
by offering specific types of products and/or services
According to Bart (1997), the commercial mission statement consists of
3 essential components:
Key market – who is your target client/customer? (generalize if needed)
Contribution – what product or service do you provide to that client?
Distinction ( rozdiel ) – what makes your product or service unique, so that
the client would choose you?
Effective mission
• Effective mission statements commonly clarify the
organization's purpose.
• Commercial mission statements often include the
following information:
• According to Bart (1997), the commercial mission
statement consists of 3 essential components:
- Key market – who is your target client/customer?
(generalize if needed)
- Contribution – what product or service do you provide
to that client?
- Distinction – what makes your product or service
unique, so that the client would choose you?
Mission statement
• The mission statement can be used to resolve
trade-offs between different business
stakeholders.
• Stakeholders include: managers & executives,
non-management employees, shareholders,
board of directors, customers, suppliers,
distributors, creditors/bankers, governments
(local, state, federal, etc.), labour unions,
competitors
a mission should:
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Define what the company is
Limited to exclude some ventures
Broad enough to allow for creative growth
Distinguish the company from all others
Serve as framework to evaluate current
activities
• Stated clearly so that it is understood by all
McDonalds - mission
• McDonalds - "To provide the fast food
customer food prepared in the same highquality manner world-wide that is tasty,
reasonably-priced & delivered consistently in a
low-key décor and friendly atmosphere."
– Key Market: The fast food customer world-wide
– Contribution: tasty and reasonably-priced food
prepared in a high-quality manner
– Distinction: delivered consistently (world-wide) in a
low-key décor and friendly atmosphere.
Courtyard by Marriott -mission
• Courtyard by Marriott - "To provide economy
and quality minded travelers with a premier,
moderate priced lodging facility which is
consistently perceived as clean, comfortable,
well-maintained, and attractive, staffed by
friendly, attentive and efficient people"
– Key Market: economy and quality minded travelers
– Contribution: moderate priced lodging
– Distinction: consistently perceived as clean,
comfortable, well-maintained, and attractive, staffed
by friendly, attentive and efficient people
Mission
a Mission should:
• Define what the company is
• Limited to exclude some ventures
• Broad enough to allow for creative growth
• Distinguish the company from all others
• Serve as framework to evaluate current
activities
• Stated clearly so that it is understood by all
Vision
• An aspirational description of what an
organization would like to achieve or
accomplish in the mid-term or long-term
future.
• It is intended to serves as a clear guide for
choosing current and future courses of
action. See also mission statement.
Vission statement
• Vision: Defines the way an organization
or enterprise will look in the future.
Vision is a long-term view, sometimes
describing how the organization would
like the world to be in which it operates.
For example, a charity working with the
poor might have a vision statement which
reads "A World without Poverty
Camparison vission and mission
• Mission: Defines the fundamental purpose of
an organization or an enterprise, succinctly
describing why it exists and what it does to
achieve its Vision.
• Organizations sometimes summarize goals and
objectives into a mission statement and/or a
vision statement.
• Others begin with a vision and mission and
use them to formulate goals and objectives.
Strategy
• Strategy a word of military origin, refers to a
plan of action designed to achieve a particular
goal.
• In military usage strategy is distinct (odlišná)
from tactics,
• Which is part of the four levels of warfare:
political goals or grand strategy, strategy,
operations, and tactics.
• "a comprehensive way to try to pursue political
ends, including the threat or actual use of force,
in a dialectic of wills – there have to be at least
two sides to a conflict
2. Strategic analysis
• Macro-enviroment analysis :industries,
markets, companies, clients and competitors
• Law system ( statutory law,commercial code,
privat and public law, cotracts law,property law,
bankruptcy law)
• Government and business – are equal and
reciprocal relationship
• Governments dependent´c on Business and
assistance to business , government regulatory
agencies – their impact on business
Analysis
• Macroenvironment
• There are a number of common approaches how the
external factors, which are mentioned in the defintion of
Kroon and which describe the macro environment.
• These factors indirectly affect the organization but
cannot be controlled by it.
• One approach could be the PEST analysis. PEST
stands for political, economic, social and technological.
• Two more factors, the environmental and legal factor,
are defined within the PESTEL analysis (or PESTLE
analysis).
Economical factors
• Inflation rate
• Growth in spending power
• Rate of people in a pensionable age etc.
Technological factors
• Technological changes
• New or improved distribution channels
• Improved communication and knowledge
tranfer etc.
Environmental factors
• Laws on
– Waste disposal
– Energy consumption
• Pollution monitoring etc.
Political factors
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Taxation Policy
Trade regulations
Governmental stability
Unemployment Policy etc.
Legal factors
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Unemployment law
Health and safety
Product safety
Advertising regulations
Product labelling etc.[6]
Competitive market equilibrium
• is the traditional concept of economic
equilibrium, appropriate for the analysis of
commodity markets with flexible prices
and many traders, and serving as the
benchmark of efficiency in economic
analysis.
Competitive markets
• Competitive markets are an ideal, a standard
that other market structures are evaluated by.
• A competitive equilibrium is a vector of prices
and an allocation such that given the prices,
each trader by maximizing his objective
function (profit, preferences) subject to his
technological possibilities and resource
constraints plans to trade into his part of the
proposed allocation, and such that the prices
make all net trades compatible with one another
('clear the market')
Porters model
• Porter’s four corners model is a predictive tool
designed by Michael Porter that helps in determining a
competitor’s course of action.
• Unlike other predictive models which predominantly rely
on a firm’s current strategy and capabilities to
determine future strategy
• Porter’s model additionally calls for an understanding of
what motivates the competitor.
• This added dimension of understanding a competitor's
internal culture, value system, mindset and
assumptions help in determining a much more accurate
and realistic reading of a competitor’s possible reactions
in a given situation.
Motivation – drivers
• This helps in determining competitor's action by
understanding their goals (both strategic and tactical)
and their current position vis-à-vis their goals.
• A wide gap between the two could mean the competitor
is highly likely to react to any external threat that comes
in its way, whereas a narrower gap is likely to produce
a defensive strategy.
• Question to be answered here is: What is it that drives
the competitor?
• These drivers can be at various levels and dimensions
and can provide insights into future goals.
Motivation – Management
Assumptions
• The perceptions (výber)and assumptions ( predpoklad) the
competitor has about itself and its industry would shape strategy.
• This corner includes determining the competitor's perception of
its strengths and weaknesses, organization culture and their
beliefs about competitor's goals.
• If the competitor thinks highly of its competition and has a fair
sense of industry forces, it is likely to be ready with plans to counter
any threats to its position.
• competitor who has a misplaced understanding of industry forces is
not very likely to respond to a potential attack.
• Question to be answered here is: What are competitor's
assumption about the industry, the competition and its own
capabilities? ( schopnosť)
Actions – Strategy
• A competitor's strategy determines how it competes in the market.
• However, there could be a difference between the company's
intended strategy (as stated in the annual report and
interviews) and its realized strategy (as is evident in its
acquisitions, new product development, etc.).
• It is therefore important here to determine the competitor's realized
strategy and how they are actually performing.
• If current strategy is yielding satisfactory results, it is safe to assume
that the competitor is likely to continue to operate in the same
way.
• Questions to be answered here are: What is the competitor
actually doing and how successful is it in implementing its
current strategy?
Actions – Capabilities
• This looks at a competitor's inherent ability to initiate or respond
to external forces.
• Though it might have the motivation and the drive to initiate a
strategic action, its effectiveness is dependent on its capabilities.
• Its strengths will also determine how the competitor is likely to
respond to an external threat.
• An organization with an extensive distribution network is likely to
initiate an attack through its channel, whereas a company with
strong financials is likely to counter attack through price drops.
• The questions to be answered here are: What are the strengths
and weaknesses of the competitor? Which areas is the
competitor strong in?
Strengths
• Considers implicit aspects of competitive behavior
• Firms are more often than not aware of their rivals and do have a
generally good understanding of their strategies and capabilities.
• However, motivational factors are often overlooked. Sufficiently
motivated competitors can often prove to be more competitive than
bigger but less motivated rivals.
• What sets this model apart from others is its insistence on
accounting for the "implicit" factors such as culture, history,
executive, consultants, and board’s backgrounds, goals, values
and commitments and inclusion of management's deep beliefs and
assumptions about what works or does not work in the market.[1]
3.Predictive in nature
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• Porter's four corners model provides a framework that ties
competitor's capabilities to their assumptions of the competitive
environment and their underlying motivations.
• By looking at both a firm's capabilities (what the firm can do) and
underlying implicit factors (their motivations to follow a course of
action) can help predict competitor's actions with a relatively
higher level of confidence.
• The underlying assumption here is that decision makers in firms are
essentially human and hence subject to the influences of
affective and automatic processes described by neuroscientists.
• Hence by considering these factors along with a firm's
capabilities, this model is a better predictor of competitive behavior.
Use in competitive intelligence and
strategy
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Despite its strengths, Porter's four corners model is not widely used in strategy and
competitive intelligence.
In a 2005 survey by the Society of Competitive Intelligence Professionals's (SCIP)
frequently used analytical tools, Porter's four corners does not even figure in the top
ten
However this model can be used in competitive analysis and strategy as follows:
Strategy development and testing: Can be used to determine likely actions by
competitors in response to the firm's strategy. This can be used when developing a
strategy (such as for a new product launch) or to test this strategy using
simulation techniques such as a business war game.
Early warning
The predictive nature of this tool can also alert firms to possible threats due to
competitive action.
Porter's four corners also works well with other analytical models. For instance it
complements Porters five forces model well. Competitive Cluster Analysis of
industry products in turn complements Four Corners Analysis.[3] Using such models
that complement each other can help create a more complete analysis
Porter's five forces refer to
competition from external sources..
• Porter referred to these forces as the micro environment, to
contrast it with the more general term macro environment.
• They consist of those forces close to a company that affect its ability
to serve its customers and make a profit. A change in any of the
forces normally, requires a business unit to re-assess the
marketplace given the overall change in industry information.
• The overall industry attractiveness does not imply that every firm in
the industry will return the same profitability.
• Firms are able to apply their core competencies, business model
or network to achieve a profit above the industry average.
• A clear example of this is the airline industry. As an industry,
profitability is low and yet individual companies, by applying unique
business models, have been able to make a return in excess of the
industry average.
• 1 The five forces
– 1.1 The threat of the entry of new competitors
– 1.2 The threat of substitute products or
services
– 1.3 The bargaining ( vyjednávanie) power of
customers (buyers)
– 1.4 The bargaining power of suppliers
• 1.5 The intensity of competitive rivalry .
The threat of the entry of new
competitors
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Profitable markets that yield high returns will attract new firms.
This results in many new entrants, which eventually will decrease profitability for all
firms in the industry. Unless the entry of new firms can be blocked by incumbents,
the abnormal profit rate will tend towards zero (perfect competition).
The existence of barriers to entry (patents, rights, etc.) The most attractive
segment is one in which entry barriers are high and exit barriers are low. Few new
firms can enter and non-performing firms can exit easily.
Economies of product differences
Brand equity
Switching costs or sunk costs
Capital requirements
Access to distribution
Customer loyalty to established brands
Absolute cost
Industry profitability; the more profitable the industry the more attractive it will be to
new competitors
The threat of substitute products or services
• The existence of products outside of the realm of the
common product boundaries increases the propensity
of customers to switch to alternatives:
• Buyer propensity to substitute – sklon k náhrade
• Relative price performance of substitute
• Buyer switching costs ( prepájanie nákladov )
• Perceived level of product differentiation
• Number of substitute products available in the market
• Ease of substitution. Information-based products are
more prone to substitution, as online product can easily
replace material product.
• Substandard product
• Quality depreciation
The bargaining power of customers (buyers)
• The bargaining power of customers is also described as the market
of outputs: the ability of customers to put the firm under pressure,
which also affects the customer's sensitivity to price changes.
• Buyer concentration to firm concentration ratio
• Degree of dependency upon existing channels of distribution
• Bargaining leverage, particularly in industries with high fixed costs
• Buyer volume
• Buyer switching costs relative to firm switching costs
• Buyer information availability
• Ability to backward integrate
• Availability of existing substitute products
• Buyer price sensitivity
• Differential advantage (uniqueness) of industry products
• RFM Analysis
The bargaining power of suppliers
• The bargaining power of suppliers is also described as the market of
inputs. Suppliers of raw materials, components, labor, and services
(such as expertise) to the firm can be a source of power over the
firm, when there are few substitutes. Suppliers may refuse to work
with the firm, or, e.g., charge excessively high prices for unique
resources.
• Supplier switching costs relative to firm switching costs
• Degree of differentiation of inputs
• Impact of inputs on cost or differentiation
• Presence of substitute inputs
• Strength of distribution channel
• Supplier concentration to firm concentration ratio
• Employee solidarity (e.g. labor unions)
• Supplier competition - ability to forward vertically integrate and cut
out the BUYER
For most industries, the intensity of competitive
rivalry is the major determinant of the
competitiveness of the industry
• Sustainable competitive advantage through
innovation
• Competition between online and offline
companies;
• Level of advertising expense
• Powerful competitive strategy
• The visibility of proprietary items on the Web
used by a company which can intensify
competitive pressures on their rivals.
Criticisms
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Porter's framework has been challenged by other academics and strategists such as Stewart
Neill. Similarly, the likes of Kevin P. Coyne and Somu Subramaniam have stated that three
dubious assumptions underlie the five forces:
That buyers, competitors, and suppliers are unrelated and do not interact and collude.
That the source of value is structural advantage (creating barriers to entry).
That uncertainty is low, allowing participants in a market to plan for and respond to competitive
behavior.
An important extension to Porter was found in the work of Adam Brandenburger and Barry
Nalebuff in the mid-1990s. Using game theory, they added the concept of complementors (also
called "the 6th force"), helping to explain the reasoning behind strategic alliances.
The idea that complementors are the sixth force has often been credited to Andrew Grove, former
CEO of Intel Corporation.
According to most references, the sixth force is government or the public. Martyn Richard Jones,
whilst consulting at Groupe Bull, developed an augmented 5 forces model in Scotland in 1993. It
is based on Porter's model and includes Government (national and regional) as well as Pressure
Groups as the notional 6th force. This model was the result of work carried out as part of Groupe
Bull's Knowledge Asset Management Organisation initiative.
Porter indirectly rebutted the assertions of other forces, by referring to innovation, government,
and complementary products and services as "factors" that affect the five forces.[4]
4. Critical success factor
• Is the term for an element that is necessary for an organization or
project to achieve its mission.
• It is a critical factor or activity required for ensuring the success of a
company or an organization.
• The term was initially used in the world of data analysis, and
business analysis.
• For example, a CSF for a successful Information Technology (IT)
project is user involvement.
• Critical success factors are those few things that must go well to
ensure success for a manager or an organization, and, therefore,
they represent those managerial or enterprise area, that must be
given special and continual attention to bring about high
performance. CSFs include issues vital to an organization's current
operating activities and to its future success."
Succes
• Many argue that the success of a business
is based on identifying a niche market that
will ultimately result in growth,
development and profitability.
Critical success
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A critical success factor drives the strategy forward, it makes or
breaks the success of the strategy, (hence “critical”).
Strategists should ask themselves 'Why would customers choose
us?'.
The answer is typically a critical success factor.
KPIs, on the other hand, are measures that quantify management
objectives and enable the measurement of strategic performance.
An example:
KPI = Number of new customers. (Measurable, quantifiable)
CSF = Installation of a call centre for providing superior customer
service (and indirectly, influencing acquiring new custome
Marketing
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Some examples are:
New customers acquired
Demographic analysis of individuals (potential customers) applying to become
customers, and the levels of approval, rejections, and pending numbers.
Status of existing customers
Customer attrition
Turnover (ie, Revenue) generated by segments of the customer population.
Outstanding balances held by segments of customers and terms of payment.
Collection of bad debts within customer relationships.
Profitability of customers by demographic segments and segmentation of customers
by profitability.
Many of these customer KPIs are developed and managed with customer
relationship management (CRM) software.
Faster availability of data is a competitive issue for most organizations. For example,
businesses which have higher operational/credit risk (involving for example credit
cards or wealth management) may want weekly or even daily availability of KPI
analysis, facilitated by appropriate IT systems and tools.
Manufacturing
• Overall equipment effectiveness, or OEE, is a set of broadly
accepted non-financial metrics which reflect manufacturing success.
• Cycle Time
• Cycle time is the total time from the beginning to the end of your
process, as defined by you and your customer. Cycle time includes
process time, during which a unit is acted upon to bring it closer to
an output, and delay time, during which a unit of work is spent
waiting to take the next action.
• Cycle Time Ratio
• CTR = StandardCycleTime / RealCycleTime
• Utilization
• Rejection rate
Performance Indicator or Key
Performance Indicator
• success is defined in terms of making progress toward strategic
goals, but often, success is simply the repeated achievement of
some level of operational goal
• What is important' often depends on the department measuring
the performance - the KPIs useful to a Finance Team will be quite
different to the KPIs assigned to the sales force, for example.
• Because of the need to develop a good understanding of what is
important, performance indicator selection is often closely
associated with the use of various techniques to assess the
present state of the business, and its key activities. These
assessments often lead to the identification of potential
improvements; and as a consequence, performance indicators are
routinely associated with 'performance improvement' initiatives.
• A very common method for choosing KPIs is to apply a
management framework such as the Balanced scorecard.
Categorization of indicators
• Key Performance Indicators define a set of
values used to measure against.
• These raw sets of values, which are fed to
systems in charge of summarizing the
information, are called indicators.
Indicators identifiable as possible
candidates for KPIs can be summarized
into the following sub-categories:
Categorie
• Quantitative indicators which can be
presented as a number.
• Practical indicators that interface with existing
company processes.
• Directional indicators specifying whether an
organization is getting better or not.
• Actionable indicators are sufficiently in an
organization's control to effect change.
• Financial indicators used in performance
measurement and when looking at an operating
index
IT
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Availability
Mean Time Between Failure
Mean Time to Repair
Unplanned Availability
Supply Chain Management
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Businesses can utilize KPIs to establish and monitor progress toward a variety of goals,
including lean manufacturing objectives, MBE (Minority Business Enterprise) and diversity
spending, environmental "green" initiatives, cost avoidance (CA) programs and low-cost country
sourcing (LCCS) targets.
Any business, regardless of size, can better manage supplier performance with the help of KPIs
robust capabilities, which include:
Automated entry and approval functions
On-demand, real-time scorecard measures
Single data repository to eliminate inefficiencies and maintain consistency
Advanced workflow approval process to ensure consistent procedures
Flexible data-input modes and real-time graphical performance displays
Customized cost savings documentation (CSD)
Simplified setup procedures to eliminate dependence upon IT resources.
Main SCM KPIs will detail the following processes:
sales forecasts
inventory
procurement and suppliers
warehousing
transportation
reverse logistics
Problems
• In practice, overseeing Key Performance Indicators can prove
expensive or difficult for organizations.
• Indicators such as staff morale may be impossible to quantify.
• Another serious issue in practice is that once a measure is created,
it becomes difficult to adjust to changing needs as historical
comparisons will be lost.
• Conversely, measures are often of dubious relevance, because
history does exist.
• Furthermore, since businesses with similar backgrounds are often
used as a benchmark for such measures, measures based only
on in-house practices make it difficult for an organization to
compare with these outside benchmarks.
• Measures are also used as a rough guide rather than a precise
benchmark.
5.Resource
• A resource is any physical or virtual entity
of limited availability that needs to be
consumed to obtain a benefit from it.
• In most cases, commercial or even noncommercial factors require resource
allocation through resource management.
There are two types of resources;
renewable and non-renewable
Value of a resource
• The purely economic value of a resource is controlled by
supply and demand.
• This is, however, a narrow perspective on resources as
there are many things that cannot be measured in
money.
• Natural resources like forests, mountains etc. are
considered beautiful so they have aesthetic value.
Resources also have an ethical value as well, because it
is widely recognized that it is our moral duty to protect
and conserve them for the future generations (see
sustainable development
• It entails specifying the organization's mission,
vision and objectives, developing policies and
plans, often in terms of projects and programs,
which are designed to achieve these objectives,
and then allocating resources to implement the
policies and plans, projects and programs.
• A balanced scorecard is often used to evaluate
the overall performance of the business and its
progress towards objectives.
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Characteristics of resources
• Resources have three main
characteristics: utility ( užitočnosť),
quantity (often in terms of availability), and
consumption. However, this definition is
not accepted by some, for example deep
ecologists who believe that non-human
elements are independent of human
values.
Types of resources
• Natural resources
• Natural resources are derived from the environment.
• Many of them are essential for our survival while others are used for
satisfying our needs.
• Natural resources may be further classified in different ways; on the
basis of origin, resources may be divided into:
• Biotic - Biotic resources are those obtained from the biosphere.
Forests and their products, animals, birds and their products, fish
and other marine organisms are important examples. Minerals such
as coal and petroleum are also included in this category because
they were formed from decayed organic matter.
• Abiotic - Abiotic resources comprise non-living things. Examples
include land, water, air and minerals such as gold, iron, copper, silver
etc.
• On the basis of the stage of development, natural resources may be
called:
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Potential Resources
- Potential resources are those that exist in a region and may be used in the
future. For example, mineral oil may exist in many parts of India having
sedimentary rocks, but until the time it is actually drilled out and put into use,
it remains a potential resource.
Stock are the materials in the environment which have the potential to satisfy
human needs but do not have the appropriate technology to access them.
For example, hydrogen and oxygen are two inflammable gases present in
water, but we do not have the technology to use them from water.
Reserved Resources are the subset of stock, where use has not yet been
started and are saved for future use.
Actual resources are those that have been surveyed, their quantity and
quality determined, and are being used in present times. For example,
petroleum and natural gas obtained from the Mumbai High Fields.
The development of an actual resource, such as wood processing depends
upon the technology available and the cost involved. That part of the actual
resource that can be developed profitably with available technology is called
a reserve.
On the basis of renewability, natural resources can be categorized into:
Renewable Resources
• Renewable resources are those that can be
replenished or reproduced easily. Some of them,
like sunlight, air, wind, etc., are continuously
available and their quantity is not affected by
human consumption.
• Many renewable resources can be depleted by
human use, but may also be replenished, thus
maintaining a flow.
• Some of these, like agricultural crops, take a
short time for renewal; others, like water, take
a comparatively longer time, while still others,
like forests, take even longer
Non-renewable Resources
• - Non-renewable resources are formed over very long
geological periods. Minerals and fossils are included in this
category. Since their rate of formation is extremely slow, they cannot
be replenished once they are depleted. Out of these, the metallic
minerals can be re-used by recycling them, but coal and petroleum
cannot be recycled.
• Conditionally Renewable Resources - Conditionally renewable
resources are often classified as a third kind of resource, or as a
subtype of renewable resources. They are dependent upon the
speed and quantity of consumption, and over consumption can lead
to depletion and total and everlasting destruction of the resource.
Important examples are agricultural areas, fish and other animals,
forests, healthy water and soil, cultivated and natural landscapes.
Conditionally renewable resources are presently subject to excess
human consumption and the only sustainable long term use of such
resources is the so-called zero ecological footprint, when we use
less than
Other resources
• Human resources
• Human beings are also considered to be resources. The term
Human Resources can also be defined as the skills, energies,
talents, abilities and knowledge that are used for the production of
goods or the rendering of services
• In a project management context, human resources are those
employees responsible for undertaking the activities defined in the
project plan.
• Tangible / intangible resources
• Resources may be split ( môžeme deliť )into tangible and
intangible resources. Tangible resources are those resources like
equipment, vehicles which have actual physical existence;
whereas intangible resources are things like corporate images,
brands and patents that are present but cannot be grasped or
contained.
6.Resources allocation
• allocating the right amount of resources to the different
parts of your business so that those assigned to
particular goals have what they need to meet their
objectives.
• This ranges from providing your workers with the right
supplies to enacting systems by which employees
receive the necessary training, all work processes are
tested, and all information and data
• To effectively manage your business strategically,
every inch of your company must have its needs met in
these ways, so all parts can work together as a
seamless, highly functioning whole.
Resource management
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In organizational studies, resource management is the efficient and
effective deployment for an organization's resources when they are needed.
Such resources may include financial resources, inventory, human
skills, production resources, or information technology (IT).
In the realm of project management, processes, techniques and
philosophies as to the best approach for allocating resources have been
developed. These include discussions on functional vs. cross-functional
resource allocation as well as processes espoused by organizations like the
Project Management Institute (PMI) through their Project Management
Body of Knowledge (PMBOK) methodology to project management.
Resource management is a key element to activity resource estimating and
project human resource management.
Both are essential components of a comprehensive project management
plan to execute and monitor a project successfully.
As is the case with the larger discipline of project management, there are
resource management software tools available that automate and assist
the process of resource allocation to projects and portfolio resource visibility
including supply and demand of resources.
HR (Human Resource)
Management
• This is the science of allocating human resources
among various projects or business units, maximizing
the utilization of available personnel resources to
achieve business goals; and performing the activities
that are necessary in the maintenance of that workforce
through identification of staffing requirements, planning
and oversight of payroll and benefits, education and
professional development, and administering their
work-life needs. The efficient and effective deployment
of an organization's personnel resources where and
when they are needed, and in possession of the tools,
training and skills required by the work.
Techniques
• One resource management technique is resource
leveling.
• It aims at smoothing the stock of resources on hand,
reducing both excess inventories and shortages.
• The required data are: the demands for various
resources, forecast by time period into the future as far
as is reasonable, as well as the resources'
configurations required in those demands, and the
supply of the resources, again forecast by time period
into the future as far as is reasonable.
• The goal is to achieve 100% utilization but that is very
unlikely, when weighted by important metrics and
subject to constraints, for example: meeting a minimum
service level, but otherwise minimizing cost.
The principle is to invest in
resources as stored capabilities
• The principle is to invest in resources as
stored capabilities, then unleash the capabilities
as demanded.
• A dimension of resource development is
included in resource management by which
investment in resources can be retained by a
smaller additional investment to develop a new
capability that is demanded, at a lower
investment than disposing of the current
resource and replacing it with another that has
the demanded capability.
In conservation
• In conservation, resource management is a set
of practices pertaining to maintaining natural
systems integrity.
• Examples of this form of management are air
resource management, soil conservation,
forestry, wildlife management and water
resource management.
• The broad term for this type of resource
management is natural resource management
(NRM).
Corporate Resource
Management Process
• Large organizations usually have a
defined corporate resource management
process which mainly guarantees that
resources are never over-allocated across
multiple projects.
Competitive advantage
• is defined as the strategic advantage
one business entity has over its rival
entities within its competitive industry.
• Achieving competitive advantage
strengthens and positions a business
better within the business environment
Competitive advantage
• is based on theory that seeks to address some of the
criticisms of comparative advantage.
• Michael Porter proposed the theory in 1985.
Competitive advantage theory suggests that states
and businesses should pursue policies that create highquality goods to sell at high prices in the market. Porter
emphasizes productivity growth as the focus of national
strategies.
• Competitive advantage rests on the notion that cheap
labor is ubiquitous and natural resources are not
necessary for a good economy.
• The other theory, comparative advantage, can lead
countries to specialize in exporting primary goods and
raw materials that trap countries in low-wage economies
due to terms of trade.
Competitive advantage
• attempts to correct for this issue by stressing
maximizing scale economies in goodsservices that
garner premium prices (Stutz and Warf 2009).
• Competitive advantage occurs when an organization
acquires or develops an attribute or combination of
attributes that allows it to outperform its competitors.
These attributes can include access to natural
resources, such as high grade ores or inexpensive
power, or access to highly trained and skilled personnel
human resources.
• New technologies such as robotics and information
technology either to be included as a part of the product,
or to assist making it.
7.The term competitive advantage
• is the ability gained through attributes and resources to perform
at a higher level than others in the same industry or market
(Christensen and Fahey 1984, Kay 1994, Porter 1980 cited by
Chacarbaghi and Lynch 1999, p. 45).
• The study of such advantage has attracted profound research
interest due to contemporary issues regarding superior
performance levels of firms in the present competitive market
conditions.
• “A firm is said to have a competitive advantage when it is
implementing a value creating strategy not simultaneously being
implemented by any current or potential player” (Barney 1991 cited
by Clulow et al.2003, p. 221). Successfully implemented strategies
will lift a firm to superior performance by facilitating the firm with
competitive advantage to outperform current or potential players
(Passemard and Calantone 2000, p. 18).
To gain competitive advantage a business strategy of a firm manipulates
the various resources over which it has direct control and these resources
have the ability to generate competitive advantage (Reed and Fillippi 1990
cited by Rijamampianina 2003, p. 362).
Superior performance outcomes and superiority in production resources
reflects competitive advantage (Day and Wesley 1988 cited by Lau
signify competitive advantage
• as the ability to stay ahead of present or potential competition, thus
superior performance reached through competitive advantage will
ensure market leadership.
• Also it provides the understanding that resources held by a firm and
the business strategy will have a profound impact on
generating competitive advantage. Powell (2001, p. 132) views
business strategy as the tool that manipulates the resources and
create competitive advantage, hence, viable business strategy may
not be adequate unless it possess control over unique resources
that has the ability to create such a unique advantage.
• Summarizing the view points, competitive advantage is a key
determinant of superior performance and it will ensure survival
and prominent placing in the market.
• Superior performance being the ultimate desired goal of a firm,
competitive advantage becomes the foundation highlighting the
significant importance to develop same.