The analysis of a company’s resources is a beneficial way to know the situation of the same. It allows you to discover what your possibilities are and all the potential that you could reach.
Doing this analysis will give a much more complete view of what the company is. It is also one of the analyzes to do when starting a business from scratch. It allows a more in-depth understanding of the available resources and how they can be transformed into capabilities.
These capabilities are what will enable the organization to survive in the business ecosystem.
But, let us start at the beginning. To analyze the resources of a company, we have to know what they are.
What are company resources?
To identify them, an inventory of the company’s resources must be made. Depending on the type of resources that are, this will be easier or more complicated.
Many of them can be easily seen in the company’s financial statement. There we will quickly see tangible resources, although other types are more challenging to measure.
But we go with the types of resources to be able to understand the concept well.
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Resource types
There are different divisions regarding the types of resources of a company. Still, the most common is the one that divides them between tangible and intangible resources.
Tangible resources
The tangible resources can be divided, in turn, into financial and physical resources. Financial resources include the available capital, collection rights, etc.
For their part, physical resources respond to the material properties available to the company. For example, if it is owned and not rented, the building or the office, the computerized or specialized equipment, the vehicles, the furniture, etc. Any available property is, therefore, a tangible resource.
Intangible resources
The intangible resources do something more complicated analysis of a company’s resources. In this case, we can also divide it into two different resource subtypes.
On the one hand, we will have the resources related to intellectual property. For example, company-owned patents or software licenses. They are also known as non-human resources.
Additionally, organizational assets such as brand equity or reputation of products or companies are also included here.
On the other, we have to talk about human capital. This is where the skills of the staff, their motivation, or their knowledge would enter.
In this case, they usually require a qualitative and not quantitative analysis as in tangible resources.
Giving an economic value to these resources is more complicated, and to help you do this, the theory of resource and capacity analysis emerged.
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The Theory of Resource and Capability Analysis
The theory of analysis of resources and capabilities focuses on searching for the competitive advantages that a company has. To do this, it identifies and makes a strategic assessment of the resources and skills it possesses.
This theory starts from two main ideas:
- The first is that it is resources and capabilities that make companies different from each other.
- The second is that resources and capacities are not available to companies under the same conditions.
- Therefore, to find the company’s competitive advantages, it is necessary to measure the resources of a company and how they can generate different capacities.
This takes an analysis process that is as follows:
- First, the resources and capabilities that depend on them are identified. In this way, the starting potential to define the strategy can be known.
- Second, you have to carry out the strategic assessment. In this phase, resources and capabilities are related to their ability to generate a competitive advantage in the market. In addition, it is necessary to check if this advantage can be maintained over time and if there will be any problem in obtaining the related returns.
- Finally, it is time to analyze the next steps. What new resources and capabilities are needed, and how to exploit existing resources and capabilities to maintain competitive advantage.
How to get a competitive advantage?
To better understand this theory, it is essential to understand the concept of competitive advantage.
For a competitive advantage to occur, the resources that make it possible must have two different characteristics:
- Shortage
- Relevance
When a product or resource is necessary, but there is not much of it, there is a shortage. Therefore, having this resource represents a very high value compared to the competition. The greater the scarcity of this resource, the more critical it will be to count on it.
The other characteristic is more challenging to measure and is all about relevance. In this case, it has to do with the importance of a specific capacity or resource to achieve success in a particular sector.
For example, the capacity for innovation or investment in R&D can be fundamental in the technology sector but not a determining factor in the food sector.
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Criteria for competitive advantage
In addition, we find five different criteria that will make it possible to maintain this competitive advantage.
These criteria are durability, transferability, imitability, the s ustituibilidad, and complementarity.
Durability
The durability is related to the duration of the resource or capacity over time. For example, the use of the brand or human capital is not spent and can be used in different projects. Money, for instance, cannot be consumed as it is used.
Transferability
The transferability has to do with the ability of the assets or resources of a company to be transferred to another. For example, knowledge is easily transferable or the use of specific software that does not belong to us.
On the contrary, patents or even human teams are more complicated to transfer. The more difficult it is to make this transfer, the better chance of maintaining a competitive advantage.
Imitability
Imitability is a straightforward concept. It refers to the ease with which the competition can imitate the resources or capabilities of the company. The easier it is, the less competitive advantage it will be.
Even so, this factor also comes into playtime. It is always in favor of the company with these resources and against those who must implement them since it will involve an additional investment.
Substitutability
The substitutability is a variation of the previous one. Therefore, it is not a question of imitating the resources or capacities of the competitor but of looking for alternatives that give the same results.
The more difficult it is for a competing company to replace specific resources or capabilities, the more competitive advantage it will be for the organization.
Complementarity
Finally, complementarity refers to the ability of different capacities to combine. Following the general theory of systems, it responds to resources with a higher value combined than independently.
That is, the sum of the capacities is greater than the sum of them separately. An example will be if we have an excellent scientific team in the company and a laboratory with the most modern equipment for R&D.
The complementarity between the human team and the physical resource makes the added value higher than if there were only outstanding scientists but destructive means, or vice versa also that a competitor needs both elements to compete with us.