Strategy Evaluation Is a Waste of Organizational ResourcesIntroductionOrganizational resources and capabilities allow a company to achieve superior quality, innovation, customer responsiveness, which creates superior value change and helps to get competitive advantage upon their competitors. The resources and capabilities allow differentiate product with substantially lower cost than its competitors. It allows earning a profit rate substantially above the Industry's average rate. Example, Toyota has distinctive competencies in the development and operation of manufacturing process. Toyota has employed a whole range of manufacturing Techniques, such as Just in time (JIT) inventory system.
Self-managing teams and reduced set up times for complex equipments. This complexity helps Toyota to attain superior efficiency and product quality which are the main factors of its competitive advantage in the global automobile industry (Johnson, & Scholes, 2001, 112-17)There are two types of organization resources. One is tangible resources such as land, buildings, plant and equipment and other is intangible resources such as brand name, reputations, patents, technology, and marketing Knowledge. To get distinctive competency company's resources should be both valuable and unique. Distinctive competence is defined as the unique strength that allows organization to achieve superior efficiency as well as competitive advantage.
Example, Polaroid (Photography Company) able to get competitive advantage upon its competitor by using its higher technological efficiency (Johnson, & Scholes, 2001, 112-17). In response to a concern that many senior executives were focusing exclusively on financial measurements such as return on investment and earnings per share to run their businesses, Robert Kaplan and David Norton introduced the concept of the Balanced Scorecard (BSC) in 1992. While these metrics are undeniably important, it would be detrimental to the long-term success of a company to rely exclusively on these short-term metrics.
Utilization of a BSC allows management to shift their focus away from short-term measurements and provides a method for performance metrics to be tied more closely to a firm's strategy and long-term vision. (Leauby & Wentzel, 2002, 56-60)DiscussionResources and capabilities both are interdependence, so these required a better analysis for an organization. A company may have unique and valuable resources but it has not the capabilities for well use of it, then it will be not easy for organization to achieve or sustain distinctive competence or vice versa.
Companies may able to superior in the form of efficiency, quality production of goods, innovation and customer responsiveness by using its resources and capabilities. By using the capabilities company's able to differentiate and able to produce low cost product. This finally gives higher profit than their competitors. So from the above discussion analysis of resources and capabilities are important for an organization (Johnson, & Scholes, 2001, 112-17). Kaplan and Norton define the BSC as "a comprehensive set of performance measures that provides a framework for a strategic measurement and management system".
The BSC consists of financial measures indicating the results of actions already taken as well as operational measures that drive future financial performance. The BSC gives managers information on four different perspectives: customer satisfaction, internal business process, innovation and learning, and financial. Using these operational measures drives future financial performance and allows a firm to simultaneously monitor their progress in building capabilities and acquiring necessary intangible assets needed for future growth. Acquiring the necessary intangible assets enables an organization to: “retain existing loyal customers while efficiently and effectively growing market share; introduce innovative products and services; produce high-quality products/services at a lower cost with shorter lead times; use employee skills and motivation for continuous process improvements; and deploy new technology, systems, and databases. ” (Kaplan & Norton 1996, 22-23)