part 2 Strategic Analysis
Tangible Resources
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Tangible resources refer to the physical assets that an organization possesses and can be categorized as physical resources, financial resources, and human resources.
Physical resources include such things as the current state of buildings, machinery, materials, and productive capacity. To add value these physical resources must be capable of responding flexibly to changes in the marketplace. Clearly, organizations with the most up to date technology and processes which possess the knowledge to exploit their potential will be at an advantage. The extent to which an organization can achieve an acceptable return on its capital employed will determine the extent to which it can attract outside capital or financial resources. This will be linked to expec- tations about its future growth. Its financial resources will include its cash balances, debtors and creditors, and gearing (debt-to-equity ratio).
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The total workforce employed and their productivity, as measured by criteria such as profit or sales per employee, form a tangible human resource. In the knowledge- based economy the tacit knowledge and specialist skills of many employees form an intangible resource that it is difficult for competitors to imitate. It is interesting to note that it is tacit knowledge that can provide developed nations with a comparative advantage over low-cost manufacturing economies such as China and India.
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Intangible resources comprise intellectual/technological resources and reputation.
Technological resources include an organization's ability to innovate and the speed with which innovation occurs. Intellectual resources include patents and copyrights which themselves may derive from the organization's technological resources. For example, an intangible resource for the manufacturing company. Dyson, is the creative innovation of its founder, James Dyson, which competitors have been unable to successfully imitate (see Case Study: Knowledge Management on p. 145).
Organizations with valuable tacit knowledge built up through their culture, processes, and employees possess an intangible resource which cannot readily be transferred.
The reputation or 'goodwill' of an organization is increasingly recognized as a valu- able intangible asset which can easily be damaged by ill-thought-out strategies and marketing campaigns. Some organizations, such as Benetton, have made a point of courting debate with their controversial advertising campaigns. In their case it seems to draw supporters and detractors in equal measure while generating useful free publicity. Johnson & Johnson's response to malicious tampering with their Tylenol product (see Chapter 1} ensures that it consistently remains top of organizations ranked according to their reputation.'
THE INTERNAL ENVIRONMENT! A RESOURCE-BASED VIEW OF STRATEGY
12Q

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