Resources are very limited today and hence using them strategically is very important. Now these can be at micro level like in home management or at a very macro level say for a nation or country. Many scientists have worked in this field thus focusing upon optimum utilization. As per Richard D. Irwin, strategy is a match between what company can do within the universe of what it might do. It highlights organisation’s strength and weakness in view of internal environment & opportunities and threats for external environment.organisation’s strength and weakness in view of internal environment & opportunities and threats for external environment.
So what makes a resource valuable? It is nothing but a combination of three elements:
- Scarcity
- Demand
- Appropriabilty
And thus value is created.
There are many strategic theories that one can consider of resources and their optimum utilization. Some of them are:
- Porter’s Five Force Model: The structural forces of industry and the industry itself sets the design of what strategy to employ.
- Core competencies: Skills and collective learning and thus holds that the roots of competitive advantage are within the organisation.
- Resource based view (RBV): This depends on economic reasoning and sees importance of company specific resources
Further on, there are five tests of valuability for the resources. These are: Test Of Durability, Test of appropriability, Test of competitive superiority, Test of substitutability, Test of Inimitability. Managers should identify, analyse and hence try to make strategies keeping these in mind.
Here are a few points that you can consider while talking about resources and how they should be utilized.
Investing in Resources:
- Corporate strategy – continual investment
- Theory Of core competencies
- Corporate office acts as guardian of “crown jewels”
- Investing might become redundant hence caution must be taken.
Upgrading Resources:
- Unavailability or imitated resources
- Constant up gradation is the need of the hour
- Approaches:
- Constantly add new resources
- Up gradation
- Alternative forms
Leveraging Resources:
- Diversification is required.
- High rewards
- Possibility of errors
- Errors:
- Overestimation of transferability
- Entry barriers of industry
- Generic resources
So basically this is the overall idea that one needs to use resources. You must note that the resources or whatever we currently have at our disposal will not last forever and hence appropriate steps need to be taken to use them wisely. A quote to remember in this regard is “We have not inherited the earth from our forefathers but inherited it from our children and hence resource optimization needs to be done”.
Resources need to be used in such a way that all the requirements of today are fulfilled and we don’t compromise with the needs of future. Let us all fight the extreme climate changes that we are facing by saving whatever is left. A combined effort can do wonders and that is what is required right now.
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