Strategic Resources


A fairly long-lasting property or asset created by a company, that competitors can only duplicate at a net economic loss qualifies as a strategic resource. High-quality strategic resources secure to a company a powerful strategic advantage. Xerox’s patents on plain paper copying in the mid-1950s qualify as one.

Existing strategic resources could be exploited to lever a company into the creation of new resources. If allowed, it could also sow the seed of complacency and become an impediment to innovation. Going on their laurels, Xerox allowed Canon, Kodak and IBM to develop superior paper handling technology. The upstart, a company that successfully invades an incumbent’s market space usually boasts of a tightly crafted and integrated set of actions and policies, a design-type strategy.

Doing something proficiently, efficiently and consistently over a long period of time could also form the base for the creation of new strategic resources. Such resources which will be hard to replicate include a reputable image, network of experienced dealers, loyal customers and specialised knowledge unique to an organisation’s staff of engineers and designers. A good strategy aims to arrive at a coherent whole by designing and fitting different pieces together.

At the core of strategy is focus, which is about concentrating enough resources on a defined goal, not on multiple goals, in order to achieve a breakthrough in it. To apply focus is to coordinate policies that produce extra power through their interacting and overlapping effects and to apply that power to the right target. An organisation must press where it has advantages and side-step situations where it doesn’t. If strategic resources underlying an advantage can be duplicated by competitors, then, the advantage cannot be sustained. Patents securing to its holder the legally enforceable right to monopolise the application of a given technology, reputations, commercial and social relationships, network effects that increase the value of a product as the number of buyers or users increases, and tacit knowledge and skill garnered through experience are resources that are often difficult to replicate. Apple executives crafted their resources and made them proof to imitation in order to sustain their competitive advantage. It’s iPhone and iPad brand names, the complementary iTunes service and the network effects of its customer group are resources that competitors find difficult to duplicate.

To save your product or service from the fate of just being a commodity, a company must get down to provide more value. A business becomes interesting when employees think up proactive ways of increasing its value. Insights into the ways of increasing the value of a competitive advantage are the path to increasing its value and fanning the passion for the business. The economic outlook of an organisation improves when its competitive advantage increases or when the demand for the products or services of the strategic resources at the core of its competitive advantage increases.

A competitive advantage can be deepened by either increasing value to buyers, reducing costs or engaging both mechanisms. To study the attitudes, decisions and feelings of buyers, to develop a special empathy for buyers and anticipate problems before they arise helps a company to effectively improve existing products and develop new ones. Such improvements must be protected or integrated into a business that is difficult for rivals to imitate.

For a company to extend a competitive advantage is something that often entails looking away from products, buyers and competitors and looking rather at the special skills and strategic resources at the core of its competitive advantage. In a nutshell, the company gets on to build on its strengths. Dupont began as a specialist in explosives, but relying on its skills in chemistry and chemical production, it began to delve into synthetics. This eventually paid off with the discovery of cellulose, synthetic rubber and paints. Their foray into synthetics led to the development of new skills in polymer chemistry which fostered the finding of Lucite, Teflon, Nylon, Mylar, Dacron and Lycra. Knowledge is often enhanced, not used up, when it is applied.

The scarce strategic resources underlying a competitive advantage becomes more valuable as the demand for a company’s product increases. An increase in demand for the products or services often results in an increase in the value of the brand name and the company’s specialised skill in design and production. Business strategy takes to engineer a higher demand for the services or products of scarce resources.

Creating new insulating mechanisms or strengthening existing ones to keep competitors from duplicating your product or the strategic resources at the core of your competitive advantage can increase the value of your business. Working on stronger patents, brand-name protections and copyrights is helpful in this regard. If a resource base or an insulating mechanism is based on the collective know-how of a group, it is wise to reduce staff turnover.

Another means of insulating from competitors an organisation’s products or services and the strategic resources underlying its competitive advantage is by continually improving or simply altering the methods and products. Microsoft is good with this approach as it steadfastly tweaks its Windows Operating System to make it difficult or uneconomic to imitate.

Innovation championed by a combination of scientific knowledge, feedback from customers or proprietary knowledge gleaned from a company’s own internal operations is often difficult to imitate.

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