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Slide 12.

Resources in the
Entrepreneurial Venture

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.2

Meaning of Resources

A resource is anything that is


useful.
A resource is anything that the
entrepreneur and his or her
supporters can use to pursue the
venture (Wickam, 2006).
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.3

Characteristics of Resources
All resources share the following
characteristics:
they are consumed
they are in demand and are
competed for
they have a value a price tag
markets exist for them to be
exchanged.
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.4

Types of Resources in the


Entrepreneurial Venture
- Financial resources
- Human resources
- Operating resources
- Business plan
- Technological resources
- Reputational resources
- Organizational resources
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.5

Financial Resources
Financial resources are those that are
(in varying degrees) liquid.
The liquidity of a financial resource
represents the ease with which it can
be converted into cash in hand.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.6

Financial Resources
* Cash in hand
* Overdraft facilities
* Loans
* Outstanding debtors
* Investment capital
* Investments in other businesses
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.7

Operating Resources
Operating resources are those
things actually used by the
people who run the venture

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.8

Operating Resources
* Premises
* Motor vehicles
* Production machinery
* Raw materials
* Storage facilities
* Office equipment
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.9

Managing Operating Resources


The entrepreneur must ensure that the
venture has the right level and balance
of operating resources.
Too high a level or a wrong mix of
operating resources means valuable
capital is being used up unnecessarily.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.10

Managing Operating Resources


Too low a level or a wrong
mix of operating resources
means that the business
cannot fulfill its potential.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.11

Human Resources
* Productive labour
* Technical expertise
* Provision of business services
* Functional skills
* Communication skills
* Strategic and leadership skills
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.12

Technological Resources
This is embodied in the process, system or
physical transformation in the venture.
Labs
Research and development facilities
Testing and quality control technologies
Technological secrets, Proprietary
processes

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.13

Reputational Resources
These are the perceptions that constituents in the
firms environment have of the company
The quality of a firms management
The firms financial soundness
The use of corporate assets
The quality of products and services
The ability to attract, develop and retain top
people
The extent of community and environmental
responsibility
Innovativeness
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.14

Organizational Resources
These include the firms structure,
routine and systems
The firms structure
Reporting systems
Formal and informal planning

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.15

Forms of Resources
Strategic resources; these are the resources
that create competitive advantage.
Nonstrategic resources; these are usually
termed as common resources because
they are necessary for carrying out the
firms usual activities but provide no specific
advantage, e.g. ordinary desk and chairs and
office furniture.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.16

Characteristics of strategic
resources
Valuable because they exploit
opportunities or minimizes threats in a
firms environment. In addition they
help an organization to implement its
strategy effectively and efficiently.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.17

Rare in the sense that there are not


enough for all competitors or they
are not widely available to all
competitors.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.18

Imperfectly imitable so that


competitors cannot mere copy them.
Historical conditions; for example
starting a firm at a great location
undervalued by others
Ambiguous causes and effects

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.19

Nonsubstitutable with other


resources; common resources are
strategically equivalent to the valuable
and rare resources of other firms

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.20

Competitive advantage:
A resource-based view

Two issues:
First: Can resources be obtained in
the market place?
Second: Can resources be imitated
by competitors?

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.21

High

Ease of
exchange
Low

Commodity
resources

Tradable
resources

Imitable
resources

Competitive
resources

High

Low

Ease of imitation
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.22

Commodity resources

Commodity
resources

Raw materials
Business services
Production equipment
Basic labour

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.23

Tradable resources

Tradable
resources
Patented innovations
Brands
Copyrights
Unique technologies

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.24

Imitable resources

Imitable
resources
Operating procedures
Organisational structure

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.25

Competitive resources
Competitive
resources
Costs
Customer relationships
Innovation capabilities
Organisational culture
Organisational learning
Corporate reputation
Network position
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.26

Successful entrepreneurs have a way of


looking at resources compared to managers.
This is reflected in one of the definitions of
entrepreneurship; The process of creating
and seizing an opportunity regardless of the
resources currently controlled.

Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.27

Resource Minimization Strategy


Entrepreneurs seek to use the minimum
possible amount of all types of
resources at each stage in the ventures
growth.
Entrepreneurs with this approach reduce
some of the risk in pursuing
opportunities.
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006

Slide 12.28

Other Peoples Resources


Obtaining the use of other peoples
resources particularly at the startup or
early growth stage is a very important
approach for entrepreneurs:
Money invested loaned by friend, relatives,
business associates or other investors
Board of directors
Attorneys
Bankers and other lenders
Consultants
Wickham, Strategic Entrepreneurship, 4th Edition Pearson Education Limited 2006