Business Strategy
| Threshold Competency and Resource Within the Resource Based View of the Firm | | | | 12/12/2012 |
Word count - 1840
1.0 Introduction
The idea of the strategic capability of a firm has been deliberated by academics and theorists for years, and has culminated in the widely accepted resource based view of the firm. Within business strategies there are numerous levels of competence and resource that dictate the future strategy of the organisation. The ability for a business to understand its strategic capability, and where it sits currently is vital for the firm to implement an achievable and realistic strategic plan. This essay will look at one level of strategic capability within its competencies and resources, the ‘threshold levels’, and the current literature on the subject. Wernerfelt (2012) defines and describes resources as; “… those tangible and intangible assets which are tied semi-permanently to the firm.”, and this is how a resource will be perceived for the purpose of this paper. A competence in this paper is considered to be a “… nexus or bundle of specialised resources, that are deployed to create a privileged market position” (Lado et al 1992). In both areas the threshold level of competence or resource refers to the minimum level the organisation needs to achieve to exist in a market. Without reaching this level, the organization may face market failures (Amit, Schoemaker 1994). This essay will identify these thresholds more clearly and their implications for the firm, before examining the relationship between them in constructing a business strategy.
2.1 Difference between a core and threshold competency and resource
Jubb and Robotham (1996) argue there is a need for more than one definition of a strategic competency as, having a single meaning would assume that it is absolute and measurable. Competencies cannot be easily measured due to their ever changing and personal nature. They go on to define a threshold competency
Word count - 1840
1.0 Introduction
The idea of the strategic capability of a firm has been deliberated by academics and theorists for years, and has culminated in the widely accepted resource based view of the firm. Within business strategies there are numerous levels of competence and resource that dictate the future strategy of the organisation. The ability for a business to understand its strategic capability, and where it sits currently is vital for the firm to implement an achievable and realistic strategic plan. This essay will look at one level of strategic capability within its competencies and resources, the ‘threshold levels’, and the current literature on the subject. Wernerfelt (2012) defines and describes resources as; “… those tangible and intangible assets which are tied semi-permanently to the firm.”, and this is how a resource will be perceived for the purpose of this paper. A competence in this paper is considered to be a “… nexus or bundle of specialised resources, that are deployed to create a privileged market position” (Lado et al 1992). In both areas the threshold level of competence or resource refers to the minimum level the organisation needs to achieve to exist in a market. Without reaching this level, the organization may face market failures (Amit, Schoemaker 1994). This essay will identify these thresholds more clearly and their implications for the firm, before examining the relationship between them in constructing a business strategy.
2.1 Difference between a core and threshold competency and resource
Jubb and Robotham (1996) argue there is a need for more than one definition of a strategic competency as, having a single meaning would assume that it is absolute and measurable. Competencies cannot be easily measured due to their ever changing and personal nature. They go on to define a threshold competency
References: Amit, R. Schoemaker, P. 1993. Strategic Assets and Organizational Rent. Strategic Management Journal. 14 (1) 1993. Available from: http://onlinelibrary.wiley.com/doi/10.1002/smj.4250140105 [Accessed 29/11/2012] April, K., 2002 Banerjee, P., 2003. Resource Dependence and Core Competence: Insights From Indian Software Firms. Technovation. 23 (3) 251-263. Available from: http://dx.doi.org/10.1016/S0166-4972(01)00120-1 [Accessed 24 November 2012] Black, J., Boal, K Day, G., 1994. The Capabilities of Market-Driven Organisations. Journal of Marketing. 58 (4) 37-52. Available from: http://www.jstor.org/stable/1251915 [Accessed 26 November 2012] Freund, Y Klein, D., 1998. The Strategic Management of Intellectual Competence. United States. Butterworth Heinman. Leonard- Barton, D., 1992