strategic entrepreneurship topic 4
TRANSCRIPT
STRATEGIC ENTREPRENEURSHIP
TOPIC 4DR ANIS AMIRA AB RAHMAN
RAJA ROSNAH BINTI RAJA DAUDFACULTY OF ENTREPRENEURSHIP AND BUSINESS
UNIVERSITI MALAYSIA [email protected]
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ATTRIBUTES OF STRATEGIC RESOURCES
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Strategic Entrepreneurship and Strategic Management
Source : Wheelen, T. L. and Hunger, J. D. (2000 cited in Kuratko, D. F. & Hodgetts, R. M., 2004: 521).
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What is a RESOURCE?
Any thing that is useful, tangible or intangible.
Another characteristic -semi permanent or sticky; it adheres to the venture and the entrepreneur.
Resources can be property based or knowledge based.
Property-based resources give the entrepreneur “rights” and enable a firm to control its environment.
Knowledge-based resources are more intangible, like talent or skill. Knowledge-based resources enable the firm to adapt to a changing environment.
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Resources can be divided into three (3) types:
Financial resources
Human resources
Operating resources
What is a RESOURCE?
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Financial Resources
Resources which take the form of, or can be readilyconverted to cash (monetary form)
Cash- most liquid and flexible, readily to buy otherresources
Eg: Cash in hand, overdraft facilities, loans,outstanding debtors, investment capital, investmentin other businesses.
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Operating Resources
The facilities which allow people to do their jobs andused by business to deliver its outputs to themarketplace.
Eg: Premises, motor vehicles, production machinery,raw materials, storage facilities, office equipment.
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Human Resources
People and the efforts, knowledge, skill and insightsthey contribute to the success of the venture
Eg: Productive labour, technical expertise, provisionof business services, communication skills, strategicand leadership skills
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Combination of resources
Financial
Human
Operating
Innovative Combination
New value delivered
Source: Wickham (2006)
Figure 1: Entrepreneurship and the combination of resources
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Resource-Based View Theory of the Firm
RBV-firms must access, mobilize and deploy resourcesbefore they can generate strategic resources for firmgrowth (Garnsey, 1988).
Business performance and growth is achieved whenthe firm has valuable resources and capabilitiesavailable as a source of sustainable competitiveadvantages (Mahoney, 1995; Peteraf, 1993; Garnsey,1988; Barney, 1986; Wernerfelt, 1984).
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Resource-Based View Theory of the Firm
Resource-based theory holds that sustainable competitive advantage is created when firms posses and employ resources and capabilities that are:
1. Valuable because they exploit some environmental
opportunity
2. Rare in that there are not enough for all competitors
3. Hard to copy, so that competitors cannot merely
duplicate them
4. Non-substitutable with other resources
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Strategic Resources
Inputs into the production process
Source of competitive advantage
Basic building blocks to a firm’s functioning
Can be combined in different ways
• Valuable
• Rare
• Inimitable
Provide capacity to achieve superior performance when they are:
Source : Hisrich, R. D., Peters, 2009
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Strategic Resources
Create competitive advantage.
There is a distinction between strategic and non-strategic, or common resources.
Not all capital resources and assets are strategically important.
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Strategic Resources
Common - necessary for carrying out the firm’s usualactivities, but provide no specific advantage. E.g.Ordinary desks, chairs, and office furniture.
Some resources may prevent the formulation andimplementation of valuable strategies due to theirshoddiness (poor quality) and imperfections.
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Attributes of Strategic Resources
1. Valuable
2. Rare
3. Imperfectly Imitable
4. Non-subtitutable
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Attributes of Strategic Resources
Valuable resources
Resources are valuable when they help the organization implement its strategy effectively and efficiently, which means that in a “strengths, weaknesses, opportunities, and threats in the firm’s environment.
A valuable resources is useful for the venture’s operation. E.g. property, equipment, people, and skills such as marketing, finance, and accounting
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Rare resources
A unique and valuable resource clearly gives a firm source of competitive advantage.
A resource may be considered rare when it is not widely available to all competitors.
If supply and demand are in equilibrium, and the price of the resource is generally affordable, the resource will cease to be rare.
E.g. a good location, managers who are also considered good leaders, or the control of natural resources like oil reserves.
Attributes of Strategic Resources
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Imperfectly imitable (hard to copy)resources Firms which have rare and valuable resources clearly have
advantages over firms lacking such assets.
However, even rare resources can be obtained at someprice. If the price is so high that the firm makes no profit,there is no source of competitive advantage, because thefirm has spent its advantage on the resource.
Where duplication is not possible at a price low enough toleave profits, the resource is said to be imperfectly imitableor hard to copy
Attributes of Strategic Resources
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Non-subtitutable resources Non-substitutable resources are strategic resources that
cannot be replaced by common resources.
E.g. Firm A has a rare and valuable resources, which it uses toimplement its strategy. If firm B has common resources thatcan be substituted for firm A’s valuable resources, and thesecommon resources do basically the same things, then therare and valuable resources of firm A do not confer strategicadvantage.
In fact, if firm B can obtain common resources that threatenfirm A’s competitive advantage, then so can many otherfirms, thereby ensuring that firm A has no advantage.
Attributes of Strategic Resources
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Attributes of Strategic Resources
Very different resources can be substitutes for each other.
For example, an expert-system computer programme may substitute for a manager.
A charismatic leader may substitute for a well-designed, strategic-planning system.
A well-designed, programmed-learning module may substitute for an inspirational teacher.
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REFERENCES Barney, J.B. (1991). Firm resources and sustained competitive
advantage. Journal of Management, 17,1, 99-120. Barringer, B and Ireland, D (2012) Entrepreneurship – Successfully
Launching New Ventures (4th Ed.). Pearson Education, Global Edition. Dollinger, Marc J., (2003) Entrepreneurship: Strategies and
Resources, 3rd Edition, Prentice Hall International Edition. Mahoney, J. 1995. The management of resources and the resource of
management. Journal of Business Research, 33, 91-101. Peteraf, M. (1993). The cornerstones of competitive advantage: a
Resource-Based View. Strategic Management Journal, 14 (3), 179-191. Kuratko, D. F., & Hodgetts, R. M. (2004). Entrepreneurship: Theory,
process, practice. Mason, Ohio: Thomson/South-Western Hisrich, R. D., Peters, M. P., & Shepherd, D. A.
(2009). Entrepreneurship. New York: McGraw-Hill Higher Education.
Wernerfelt, B. (1984). A resource-based view of the firm. StrategicManagement Journal, 5, 171-80.
Wickham, P. A. (2006) Strategic Entrepreneurship. (4th. Ed.). England:Pearson Education Ltd.
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