"Strategy is the direction
and scope of an organisation over the long-term:
which achieves advantage for the organisation through its
configuration of resources within
a challenging environment, to meet the needs of markets
and to fulfil stakeholder expectations".
So, what are these "resources"
that a business needs to put in place to pursue its chosen strategy?
Business resources can usefully be
grouped under several categories:
Financial Resources
Financial resources concern the
ability of the business to "finance" its chosen strategy. For example,
a strategy that requires significant investment in new products, distribution
channels, production capacity and working capital will place great strain on
the business finances. Such a strategy needs to be very carefully managed from
a finance point-of-view. An audit of financial resources would include
assessment of the following factors:
Existing finance funds
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- Cash balances
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- Bank overdraft
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- Bank and other loans
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- Shareholders' capital
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- Working capital (e.g. stocks,
debtors) already invested in the business
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- Creditors (suppliers,
government)
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Ability to raise new funds
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- Strength and reputation of the
management team and the overall business
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- Strength of relationships with
existing investors and lenders
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- Attractiveness of the market in
which the business operates (i.e. is it a market that is attracting
investment generally?)
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- Listing on a quoted Stock
Exchange? If not, is this a realistic possibility?
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Human Resources
The heart of the issue with Human Resources
is the skills-base of the business. What skills does the business already
possess? Are they sufficient to meet the needs of the chosen strategy? Could
the skills-base be flexed / stretched to meet the new requirements? An audit of
human resources would include assessment of the following factors:
Existing staffing resources
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- Numbers of staff by function,
location, grade, experience, qualification, remuneration
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- Existing rate of staff loss
("natural wastage")
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- Overall standard of training and
specific training standards in key roles
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- Assessment of key
"intangibles" - e.g. morale, business culture
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Changes required to resources
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- What changes to the organisation
of the business are included in the strategy (e.g. change of location, new
locations, new products)?
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- What incremental human resources
are required?
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- How should they be sourced?
(alternatives include employment, outsourcing, joint ventures etc.)
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Physical Resources
The category of physical resources
covers wide range of operational resources concerned with the physical
capability to deliver a strategy. These include:
Production facilities
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- Location of existing production
facilities; capacity; investment and maintenance requirements
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- Current production processes -
quality; method & organisation
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- Extent to which production
requirements of the strategy can be delivered by existing facilities
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Marketing facilities
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- Marketing management process
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- Distribution channels
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Information technology
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- IT systems
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- Integration with customers and
suppliers
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Intangible Resources
It is easy to ignore the intangible
resources of a business when assessing how to deliver a strategy - but they can
be crucial. Intangibles include:
Goodwill
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- The difference between the value
of the tangible assets of the business and the actual value of the business
(what someone would be prepared to pay for it)
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Reputation
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- Does the business have a track
record of delivering on its strategic objectives? If so, this could help
gather the necessary support from employees and suppliers
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Brands
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- Strong brands are often the key
factor in whether a growth strategy is a success or failure
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Intellectual Property
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- Key commercial rights protected
by patents and trademarks may be an important factor in the strategy.
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