The answer is that there are many factors lead to successful of an organization. One of the most important elements is business resources which mean anything and everything that helps a company establish and manages the business, for instance the capital investment, natural resources. There 2 kind of basic resources are considered as indispensable to a business, they are tangible resources and intangible resources. Each resource has their certain value to make profit so in this essay let find out more about tangible resource and intangible resource
Firstly, we have to understand clearly about the link between the relationship resources and capabilities of the company. Those properties belong to a company called resources and capabilities are what the company can do. For example, the diagram shows that there are 3 types of resources, following
Tangible resources: included financial (cash, capacity, etc.), physical (plant, equipment, land, etc.)
Intangible resources: including technology (patents, software, etc.), reputation (branding, relationship, etc.), and culture.
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Human resources: including skills, motivation, etc.
Secondly, an individual resource cannot create the competitive advantage. For example, just image if a company have many suppliers who are willing to invest to your company. However, your company doesn't have any innovations or reputation about your product brand. As the result, your company will definitely lose to other company whose image or brand is over yours. It is actually the same, if you got the idea of creativities but don't have any support from the investor your business will completely fail.
In brief, according to Lev the resource is necessary to an organization. Both of tangible and intangible resources have to work together to create group value and economic development.
2. Tangible resources
The term "tangible resources" can be defined as properties of the company which has a real physical existence. Tangible resources could be "reach out and touch". Therefore, it is easily to recognize and quantify to business consideration. There are some basic types of tangible resources such as physical resources, financial resources and human resources. All the things like the current state of buildings, machines, materials, productive capability are considered as physical resources. They have important role in creating more value to a firm when its firm have to adapt with the changes of the market place (Chatterjee and Wernerfelt, 1991), for instance if a company have more modern technology equipments, they will have more advantage. Or a company can complete the stage of turning back period, its mean that they have potential to develop and attract outside investors.
Indeed, the role of tangible resource is really important in business management. The management plan to ensure how their resources used in the best way by distributing them correctly inside or outside the company. Most of companies endeavor to obtain enough quantity and quality resources. However, their profit may be affected by the simulations from other firms.
How to create addition value on company tangible resources
What opportunities exist for economizing on their use?
One of the options is that by using less material of resources to support as the same product quality. For example, the Tiger Airways with a lower cost but still provides services as well as Jet Star Airline.
What are the possibilities for employing existing assets more profitably?
According to Tiger Airways.com, they offer for their customers flexible ticket which mean that allows customers to make unlimited online changes to your flight date and time up to 4 hours before your scheduled departure time. Therefore, customers can make any changes to the flight date and time online," as many times as you like".
3. Intangible resources
For most companies, intangible resources are more valuable than tangible resources. However, normally intangible resources remain largely invisible in company financial statements
According to Lev, the value of intangible resources is evaluated by innovation, unique organization structures, or human resources managements. Moreover, he also said that "an intangible asset is a claim to future benefits that does not related to physical or financial embodiment." Plus, he believe intangibles usually cooperate with tangible assets to create group value and economic development
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Â Daum claims that the culture of a company and strategic capabilities can be defined as intellectual capital or intangible assets, including human, structural, partnership and customer capital.
Since the industrial revolution, all the markets are dominated by the inferiority of developed economies. Therefore, a business needs to have unique strategies about the technology developments (software), in order to survive and making more profit. That's why intangible resources play an important role in a company.
How is important of intangible resources?
There must be a difference between the original product from a company and simulated products from their competitors. The one who first create and introduce the new product to the publicity always get more advantages. For example
As you may know, Apple Company has dominated in portable media players for the last decade. From 2001, they launched their first innovative products called IPod with its ITunes; they controlled the digital media market and became top for the third year running. (BusinessWeek2007a). After 6 years later, instead of seating back comfortable, Apple entered the mobile phone market in 2007 with the new production I Phone. The fast development of innovation of Apple makes their competitors guessing about which products will continue following launch out next.
As the result, you can clearly see that people always compare other products to Apple whenever they want to purchase any kind of media players or mobile phone. Indeed, Apple Company has created an unforgettable impression in their customer's concept with their unique products. All the competitors of Apple get more trouble when facing the rule of protecting innovation; a company can protect their unique products by seeking patents and copy right so that their competitors will get more trouble while trying to copy. Its mean that they go ahead 1 step compare with their competitors in competitive advantage.
Which resource is more important to a company?
To compare on those researches that have been found, many writers believe that intangible assets are more important than tangible assets. Thus, there are some of following thoughts about this argument.
As mentioned before, tangible resources are easily simulated than intangible resources because tangible resources are flexible (Chatterjee and Wernerfelt, 1991). In the other hand, intangible resources are less flexible Furthermore, Canals (2000) claimed that "as industrial society becomes a services society where knowledge and information are the mainstays of business growth, the importance of intangible resources will come increasingly to the forefront", which means he believes intangible resources have potential for competitive advantage creation than tangible resources. According to Itami and Roehl (1997), they are also used as inputs and outputs of organization activities. Moreover, to support this idea Collis and Montgomery (1998) also state that intangible resources are not consumed when using. In fact, many writers point out the quality of a company performance mostly depend on the creative thinking about their product which means that the important of innovation is really necessary for gaining competitive advantage, and neither do Teece (2000). In brief, most of specialists are totally agree that intangible resource is more important than tangible resource. Let's find out what's aspect of intangible resources can make differences.
To a firm, the highly valuable is the intellectual possessions that bring up the formation differently of knowledge. Limmpan& Rumelt (1982) and Hall (1993) have stated that intangible assets are supported and protected by legal law which might help avoiding completion by the imitation. Furthermore, according to Schroeder (2002), one of another ways to lack the duplicate intellectual properties is held in secret technologies. Indeed, that key held in secret technology is especially helpful for developing strategy of a firm. It is used when the firm has the detailed business notion or the special and unique strategy. Williamson (1985) and Kotha (2002) point out that it builds all of those important files which the firm desires to keep in secret becoming hardly to understand and lack of copy. To sum up, the intangible resources extremely have more abilities to lack the duplication than tangible resources.
According to Barney (1991) intangible resources can be categorized as managerial skills, human capital, and organization culture and organization communication. He also believed that these categories can be able to defend for the replication labors of competitors
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For the managerial skills, Barney (1991, Finkelstein and Hambrick (1996) aim that the top manager must be qualified to control the organization, especially when face with difficult situations in competing with other firms. It is clearly to see that, a organization cannot work well without the leading of manager. Therefore, a manager who has abilities of various management skills will help the firm for attaining and retaining competitive advantage.
One of the most important parts of organization assets branch is human capital. According to Pfeffer (1994) the people of organization are the real source of its competitive advantage. To support for this idea, Asefa and Huang (1994) state that the labor productivity and economic growth are depended on the training level and education employees. Employee's skills belong to strategic resource, which have placed between then management of human resources and the competitive advantage of organization (Boxall and Steeneveld, 1999). According to Pfeffer (1994), he has mentioned labor force is important source for competing, therefore it has to be logical in creating a workforce that difficult to imitate by competitors.
According to Porter (1980), he said that if the firm has a vague organization culture, they will surely face to a numerous of difficulties. Denison (1990) also agree with Porter, to support for his idea, he mentioned the term organizational culture can be considered as a basic requirement for a firm, which included things such as elementary values, beliefs and principles
In the other hand, organization communication related to a system used to explain and transfers the information to the staffs. ( Putti, 1990), It's important to make sure that the staff know what is the goal, how to achieve the goal through step by step, plus they can give their feedback to improve the goal ( Van Riel, 2000). Therefore, an effective organization communication is necessary to help the employee feel that they are considered as a part of an organization so the result of performance quality can be developed
2.2.3 Reputational assets
According to Teece (1997), all of the assessments in general of a firm's existing positions, assets and future prediction are called reputational assets. It is one of a kind of intangible resources. In fact, it is measured that is a main intangible resource because there are no competitors can compete on the value it creates by its competitive advantages. Furthermore, Dierickz and Cool (1989) have stated that "reputations are built, not bought". Therefore, to compare to the tangible assets, it was signed by the untradeable that could be complicated to copy for this intangible asset. The details of reputation assets may be corrected and ensured about the reliabilities and advantaged of the organization.
Capabilities are argued to be the paramount sources of firm success (Day, 1994; Michalisin et
al., 1997; Teece et al., 1997; Srivastava et al., 1998; Devinney et al., 2001; Bontis and Fitz-enz, 2002).
Early advocates of this claim have noted that resources do not translate into rents per se, but rather
must be utilized in some way in order to be valuable (Grant, 1991). Grant (1996) for example argued
that the success of any firm is solely dependent upon the knowledge, or the experience of its
employees. McEvily and Chakravarthy (2002) suggested that experience produces more durable
advantage than any of the other corporate resources because it is for the most part complex,
specialized and tacit. Other capabilities include the relationships established and maintained with
external parties such as customers and strategic partners, which significantly reflects the knowledge
sharing and learning ability of the firm (Slater, 1997; Dayer & Singh, 1998). The interaction between
management and employees and between personnel and tangible assets are also capabilities of high
value (Fahy, 2002). Several scholars (Michalisin et al., 1997; Johnson and Scholes, 1999; Teece,
2000) recognize that capabilities are tacit in nature because they are intricately rooted in the
organizational experience, learning and practice. Hence, capabilities are said to be the most difficult
resources to duplicate due to the highest levels of ambiguity.