1.Strategic management 40

• What are my business’s objectives?

• What are the best ways to achieve those objectives?

• What resources are required to make that happen?

objectives can have several phases:

• Assessing the landscape within which the company will operate, and formulating how the company sees its role within that landscape.

• This is commonly known as a mission statement. • Establishing objectives to answer : a long- and short-

term view of what the company can offer.• This is commonly known as a vision statement. • Stipulating the goals the company has for itself, both in

terms of financial and strategic objectives.

2. How best can we reach our goals?”.

• Phase two of successful strategic management is formulating a plan by which the company can accomplish what it sets out to do

• Within this phase, a chain of command should be put in place, pairing individuals with the right skills, knowledge, and experience with the business’s needs and objectives.

• From there, responsibilities for processes and tasks should be distributed across the full chain of command, delegating work to teams and individuals so that they company’s goals can be attained through the combined efforts of all employees.

• This includes communicating responsibilities and deliverables (what needs to be done, and how the results of those tasks will be measured).

unforeseen results

• Strategic management is not a static process that can be limited to a linear process.

• Strategic managers must be able to respond to occurrences that cannot be predicted.

• Effective strategic management - to move quickly in response to new challenges, and replace ideas and practices with processes that can help meet new needs as they present themselves.

Strategic management• Strategic management is a level of managerial activity under setting

goals and over Tactics. • Strategic management provides overall direction to the enterprise

and is closely related to the field of Organization Studies. • In the field of business administration it is useful to talk about

"strategic alignment" between the organization and its environment or "strategic consistency."

• According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context."

• Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organizational structure.

Strategic management

• is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly to determine how it has been implemented and whether it has succeeded or needs replacement by

• a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.”

Concepts/approaches of strategic management

• The specific approach to strategic management can depend upon the size of an organisation, and the proclivity to change of its business environment.

• These points are highlighted below:• A global/transnational organisation may employ a more

structured strategic management model, due to its size, scope of operations, and need to encompass stakeholder views and requirements.

• An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. This is due to its comparatively smaller size and scope of operations, as well as possessing fewer resources.

• An SME's CEO (or general top management) may simply outline a mission, and pursue all activities under that mission.

Strategic management

• It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.

• A balanced scorecard ( hodnotiaca karta)is often used to evaluate the overall performance of the business and its progress towards objectives ( pokrok k cieľom)

• Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.

Vision and mission statement

• Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement.

• Others begin with a vision and mission and use them to formulate goals and objectives.

• A Mission statement tells you the fundamental purpose of the organization. It defines the customer and the critical processes.

• A Vision statement outlines what the organization wants to be, or how it wants the world in which it operates to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria.

Mission statemenet

• A written declaration of an organization's core purpose and focus that normally remains unchanged over time.

• Properly crafted mission statements serve as filters to separate what is important from what is not,

• clearly state which markets will be served and how, and communicate a sense of intended direction to the entire organization.

• Also called company mission, corporate mission, or corporate purpose

Mission statement• Effective mission statements commonly clarify the organization's purpose.• Commercial mission statements often include the following information:• Purpose and aim(s) of the organization• The organization's primary stakeholders: clients/customers,

shareholders, • How the organization provides value to these stakeholders, for example

by offering specific types of products and/or services• According to Bart (1997), the commercial mission statement consists of

3 essential components:• Key market – who is your target client/customer? (generalize if needed)• Contribution – what product or service do you provide to that client?• Distinction ( rozdiel ) – what makes your product or service unique, so that

the client would choose you?

Effective mission

• Effective mission statements commonly clarify the organization's purpose.

• Commercial mission statements often include the following information:

• According to Bart (1997), the commercial mission statement consists of 3 essential components:

- Key market – who is your target client/customer? (generalize if needed)

- Contribution – what product or service do you provide to that client?

- Distinction – what makes your product or service unique, so that the client would choose you?

Mission statement

• The mission statement can be used to resolve trade-offs between different business stakeholders.

• Stakeholders include: managers & executives, non-management employees, shareholders, board of directors, customers, suppliers, distributors, creditors/bankers, governments (local, state, federal, etc.), labour unions, competitors

a mission should:

• Define what the company is• Limited to exclude some ventures• Broad enough to allow for creative growth• Distinguish the company from all others• Serve as framework to evaluate current

activities• Stated clearly so that it is understood by all

McDonalds - mission

• McDonalds - "To provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key décor and friendly atmosphere." – Key Market: The fast food customer world-wide– Contribution: tasty and reasonably-priced food

prepared in a high-quality manner– Distinction: delivered consistently (world-wide) in a

low-key décor and friendly atmosphere.

Courtyard by Marriott -mission

• Courtyard by Marriott - "To provide economy and quality minded travelers with a premier, moderate priced lodging facility which is consistently perceived as clean, comfortable, well-maintained, and attractive, staffed by friendly, attentive and efficient people" – Key Market: economy and quality minded travelers– Contribution: moderate priced lodging– Distinction: consistently perceived as clean,

comfortable, well-maintained, and attractive, staffed by friendly, attentive and efficient people

Mission

a Mission should:• Define what the company is• Limited to exclude some ventures• Broad enough to allow for creative growth• Distinguish the company from all others• Serve as framework to evaluate current

activities• Stated clearly so that it is understood by all

Vision

• An aspirational description of what an organization would like to achieve or accomplish in the mid-term or long-term future.

• It is intended to serves as a clear guide for choosing current and future courses of action. See also mission statement.

Vission statement

• Vision: Defines the way an organization or enterprise will look in the future. Vision is a long-term view, sometimes describing how the organization would like the world to be in which it operates. For example, a charity working with the poor might have a vision statement which reads "A World without Poverty

Camparison vission and mission

• Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its Vision.

• Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement.

• Others begin with a vision and mission and use them to formulate goals and objectives.

Strategy

• Strategy a word of military origin, refers to a plan of action designed to achieve a particular goal.

• In military usage strategy is distinct (odlišná) from tactics,

• Which is part of the four levels of warfare: political goals or grand strategy, strategy, operations, and tactics.

• "a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills – there have to be at least two sides to a conflict

2. Strategic analysis

• Macro-enviroment analysis :industries, markets, companies, clients and competitors

• Law system ( statutory law,commercial code, privat and public law, cotracts law,property law, bankruptcy law)

• Government and business – are equal and reciprocal relationship

• Governments dependent´c on Business and assistance to business , government regulatory agencies – their impact on business

Analysis• Macroenvironment• There are a number of common approaches how the

external factors, which are mentioned in the defintion of Kroon and which describe the macro environment.

• These factors indirectly affect the organization but cannot be controlled by it.

• One approach could be the PEST analysis. PEST stands for political, economic, social and technological.

• Two more factors, the environmental and legal factor, are defined within the PESTEL analysis (or PESTLE analysis).

Economical factors

• Inflation rate

• Growth in spending power

• Rate of people in a pensionable age etc.

Technological factors

• Technological changes

• New or improved distribution channels

• Improved communication and knowledge tranfer etc.

Environmental factors

• Laws on – Waste disposal– Energy consumption

• Pollution monitoring etc.

Political factors

• Taxation Policy

• Trade regulations

• Governmental stability

• Unemployment Policy etc.

Legal factors

• Unemployment law

• Health and safety

• Product safety

• Advertising regulations

• Product labelling etc.[6]

Competitive market equilibrium

• is the traditional concept of economic equilibrium, appropriate for the analysis of commodity markets with flexible prices and many traders, and serving as the benchmark of efficiency in economic analysis.

Competitive markets

• Competitive markets are an ideal, a standard that other market structures are evaluated by.

• A competitive equilibrium is a vector of prices and an allocation such that given the prices, each trader by maximizing his objective function (profit, preferences) subject to his technological possibilities and resource constraints plans to trade into his part of the proposed allocation, and such that the prices make all net trades compatible with one another ('clear the market')

Porters model

• Porter’s four corners model is a predictive tool designed by Michael Porter that helps in determining a competitor’s course of action.

• Unlike other predictive models which predominantly rely on a firm’s current strategy and capabilities to determine future strategy

• Porter’s model additionally calls for an understanding of what motivates the competitor.

• This added dimension of understanding a competitor's internal culture, value system, mindset and assumptions help in determining a much more accurate and realistic reading of a competitor’s possible reactions in a given situation.

Motivation – drivers

• This helps in determining competitor's action by understanding their goals (both strategic and tactical) and their current position vis-à-vis their goals.

• A wide gap between the two could mean the competitor is highly likely to react to any external threat that comes in its way, whereas a narrower gap is likely to produce a defensive strategy.

• Question to be answered here is: What is it that drives the competitor?

• These drivers can be at various levels and dimensions and can provide insights into future goals.

Motivation – Management Assumptions

• The perceptions (výber)and assumptions ( predpoklad) the competitor has about itself and its industry would shape strategy.

• This corner includes determining the competitor's perception of its strengths and weaknesses, organization culture and their beliefs about competitor's goals.

• If the competitor thinks highly of its competition and has a fair sense of industry forces, it is likely to be ready with plans to counter any threats to its position.

• competitor who has a misplaced understanding of industry forces is not very likely to respond to a potential attack.

• Question to be answered here is: What are competitor's assumption about the industry, the competition and its own capabilities? ( schopnosť)

Actions – Strategy

• A competitor's strategy determines how it competes in the market. • However, there could be a difference between the company's

intended strategy (as stated in the annual report and interviews) and its realized strategy (as is evident in its acquisitions, new product development, etc.).

• It is therefore important here to determine the competitor's realized strategy and how they are actually performing.

• If current strategy is yielding satisfactory results, it is safe to assume that the competitor is likely to continue to operate in the same way.

• Questions to be answered here are: What is the competitor actually doing and how successful is it in implementing its current strategy?

Actions – Capabilities

• This looks at a competitor's inherent ability to initiate or respond to external forces.

• Though it might have the motivation and the drive to initiate a strategic action, its effectiveness is dependent on its capabilities.

• Its strengths will also determine how the competitor is likely to respond to an external threat.

• An organization with an extensive distribution network is likely to initiate an attack through its channel, whereas a company with strong financials is likely to counter attack through price drops.

• The questions to be answered here are: What are the strengths and weaknesses of the competitor? Which areas is the competitor strong in?

Strengths

• Considers implicit aspects of competitive behavior

• Firms are more often than not aware of their rivals and do have a generally good understanding of their strategies and capabilities.

• However, motivational factors are often overlooked. Sufficiently motivated competitors can often prove to be more competitive than bigger but less motivated rivals.

• What sets this model apart from others is its insistence on accounting for the "implicit" factors such as culture, history, executive, consultants, and board’s backgrounds, goals, values and commitments and inclusion of management's deep beliefs and assumptions about what works or does not work in the market.[1]

3.Predictive in nature(44)

• Porter's four corners model provides a framework that ties competitor's capabilities to their assumptions of the competitive environment and their underlying motivations.

• By looking at both a firm's capabilities (what the firm can do) and underlying implicit factors (their motivations to follow a course of action) can help predict competitor's actions with a relatively higher level of confidence.

• The underlying assumption here is that decision makers in firms are essentially human and hence subject to the influences of affective and automatic processes described by neuroscientists.

• Hence by considering these factors along with a firm's capabilities, this model is a better predictor of competitive behavior.

Use in competitive intelligence and strategy

• Despite its strengths, Porter's four corners model is not widely used in strategy and competitive intelligence.

• In a 2005 survey by the Society of Competitive Intelligence Professionals's (SCIP) frequently used analytical tools, Porter's four corners does not even figure in the top ten

• However this model can be used in competitive analysis and strategy as follows:• Strategy development and testing: Can be used to determine likely actions by

competitors in response to the firm's strategy. This can be used when developing a strategy (such as for a new product launch) or to test this strategy using simulation techniques such as a business war game.

• Early warning• The predictive nature of this tool can also alert firms to possible threats due to

competitive action.• Porter's four corners also works well with other analytical models. For instance it

complements Porters five forces model well. Competitive Cluster Analysis of industry products in turn complements Four Corners Analysis.[3] Using such models that complement each other can help create a more complete analysis

Porter's five forces refer to competition from external sources..

• Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment.

• They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace given the overall change in industry information.

• The overall industry attractiveness does not imply that every firm in the industry will return the same profitability.

• Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average.

• A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models, have been able to make a return in excess of the industry average.

• 1 The five forces – 1.1 The threat of the entry of new competitors– 1.2 The threat of substitute products or

services– 1.3 The bargaining ( vyjednávanie) power of

customers (buyers)– 1.4 The bargaining power of suppliers

• 1.5 The intensity of competitive rivalry .

The threat of the entry of new competitors

• Profitable markets that yield high returns will attract new firms. • This results in many new entrants, which eventually will decrease profitability for all

firms in the industry. Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will tend towards zero (perfect competition).

• The existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily.

• Economies of product differences• Brand equity• Switching costs or sunk costs• Capital requirements• Access to distribution• Customer loyalty to established brands• Absolute cost• Industry profitability; the more profitable the industry the more attractive it will be to

new competitors

The threat of substitute products or services

• The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives:

• Buyer propensity to substitute – sklon k náhrade• Relative price performance of substitute• Buyer switching costs ( prepájanie nákladov )• Perceived level of product differentiation• Number of substitute products available in the market• Ease of substitution. Information-based products are

more prone to substitution, as online product can easily replace material product.

• Substandard product• Quality depreciation

The bargaining power of customers (buyers)

• The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes.

• Buyer concentration to firm concentration ratio• Degree of dependency upon existing channels of distribution• Bargaining leverage, particularly in industries with high fixed costs• Buyer volume• Buyer switching costs relative to firm switching costs• Buyer information availability• Ability to backward integrate• Availability of existing substitute products• Buyer price sensitivity• Differential advantage (uniqueness) of industry products• RFM Analysis

The bargaining power of suppliers

• The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources.

• Supplier switching costs relative to firm switching costs• Degree of differentiation of inputs• Impact of inputs on cost or differentiation• Presence of substitute inputs• Strength of distribution channel• Supplier concentration to firm concentration ratio• Employee solidarity (e.g. labor unions)• Supplier competition - ability to forward vertically integrate and cut

out the BUYER

For most industries, the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

• Sustainable competitive advantage through innovation

• Competition between online and offline companies;

• Level of advertising expense• Powerful competitive strategy• The visibility of proprietary items on the Web

used by a company which can intensify competitive pressures on their rivals.

Criticisms

• Porter's framework has been challenged by other academics and strategists such as Stewart Neill. Similarly, the likes of Kevin P. Coyne and Somu Subramaniam have stated that three dubious assumptions underlie the five forces:

• That buyers, competitors, and suppliers are unrelated and do not interact and collude.• That the source of value is structural advantage (creating barriers to entry).• That uncertainty is low, allowing participants in a market to plan for and respond to competitive

behavior. • An important extension to Porter was found in the work of Adam Brandenburger and

Barry Nalebuff in the mid-1990s. Using game theory, they added the concept of complementors (also called "the 6th force"), helping to explain the reasoning behind strategic alliances.

• The idea that complementors are the sixth force has often been credited to Andrew Grove, former CEO of Intel Corporation.

• According to most references, the sixth force is government or the public. Martyn Richard Jones, whilst consulting at Groupe Bull, developed an augmented 5 forces model in Scotland in 1993. It is based on Porter's model and includes Government (national and regional) as well as Pressure Groups as the notional 6th force. This model was the result of work carried out as part of Groupe Bull's Knowledge Asset Management Organisation initiative.

• Porter indirectly rebutted the assertions of other forces, by referring to innovation, government, and complementary products and services as "factors" that affect the five forces.[4]

4. Critical success factor

• Is the term for an element that is necessary for an organization or project to achieve its mission.

• It is a critical factor or activity required for ensuring the success of a company or an organization.

• The term was initially used in the world of data analysis, and business analysis.

• For example, a CSF for a successful Information Technology (IT) project is user involvement.

• Critical success factors are those few things that must go well to ensure success for a manager or an organization, and, therefore, they represent those managerial or enterprise area, that must be given special and continual attention to bring about high performance. CSFs include issues vital to an organization's current operating activities and to its future success."

Succes

• Many argue that the success of a business is based on identifying a niche market that will ultimately result in growth, development and profitability.

Critical success A critical success factor drives the strategy forward, it makes or

breaks the success of the strategy, (hence “critical”).• Strategists should ask themselves 'Why would customers choose

us?'. • The answer is typically a critical success factor.• KPIs, on the other hand, are measures that quantify

management objectives and enable the measurement of strategic performance.

• An example:• KPI = Number of new customers. (Measurable, quantifiable)• CSF = Installation of a call centre for providing superior customer

service (and indirectly, influencing acquiring new custome

Marketing

• Some examples are:• New customers acquired• Demographic analysis of individuals (potential customers) applying to become

customers, and the levels of approval, rejections, and pending numbers.• Status of existing customers• Customer attrition• Turnover (ie, Revenue) generated by segments of the customer population.• Outstanding balances held by segments of customers and terms of payment.• Collection of bad debts within customer relationships.• Profitability of customers by demographic segments and segmentation of customers

by profitability.• Many of these customer KPIs are developed and managed with

customer relationship management (CRM) software.• Faster availability of data is a competitive issue for most organizations. For example,

businesses which have higher operational/credit risk (involving for example credit cards or wealth management) may want weekly or even daily availability of KPI analysis, facilitated by appropriate IT systems and tools.

Manufacturing

• Overall equipment effectiveness, or OEE, is a set of broadly accepted non-financial metrics which reflect manufacturing success.

• Cycle Time• Cycle time is the total time from the beginning to the end of your

process, as defined by you and your customer. Cycle time includes process time, during which a unit is acted upon to bring it closer to an output, and delay time, during which a unit of work is spent waiting to take the next action.

• Cycle Time Ratio• CTR = StandardCycleTime / RealCycleTime• Utilization• Rejection rate

Performance Indicator or Key Performance Indicator

• success is defined in terms of making progress toward strategic goals, but often, success is simply the repeated achievement of some level of operational goal

• What is important' often depends on the department measuring the performance - the KPIs useful to a Finance Team will be quite different to the KPIs assigned to the sales force, for example.

• Because of the need to develop a good understanding of what is important, performance indicator selection is often closely associated with the use of various techniques to assess the present state of the business, and its key activities. These assessments often lead to the identification of potential improvements; and as a consequence, performance indicators are routinely associated with 'performance improvement' initiatives.

• A very common method for choosing KPIs is to apply a management framework such as the Balanced scorecard.

Categorization of indicators

• Key Performance Indicators define a set of values used to measure against.

• These raw sets of values, which are fed to systems in charge of summarizing the information, are called indicators. Indicators identifiable as possible candidates for KPIs can be summarized into the following sub-categories:

Categorie

• Quantitative indicators which can be presented as a number.

• Practical indicators that interface with existing company processes.

• Directional indicators specifying whether an organization is getting better or not.

• Actionable indicators are sufficiently in an organization's control to effect change.

• Financial indicators used in performance measurement and when looking at an operating index

IT

• Availability

• Mean Time Between Failure

• Mean Time to Repair

• Unplanned Availability

Supply Chain Management

• Businesses can utilize KPIs to establish and monitor progress toward a variety of goals, including lean manufacturing objectives, MBE (Minority Business Enterprise) and diversity spending, environmental "green" initiatives, cost avoidance (CA) programs and low-cost country sourcing (LCCS) targets.

• Any business, regardless of size, can better manage supplier performance with the help of KPIs robust capabilities, which include:

• Automated entry and approval functions• On-demand, real-time scorecard measures• Single data repository to eliminate inefficiencies and maintain consistency• Advanced workflow approval process to ensure consistent procedures• Flexible data-input modes and real-time graphical performance displays• Customized cost savings documentation (CSD)• Simplified setup procedures to eliminate dependence upon IT resources.• Main SCM KPIs will detail the following processes:• sales forecasts• inventory• procurement and suppliers• warehousing• transportation• reverse logistics

Problems

• In practice, overseeing Key Performance Indicators can prove expensive or difficult for organizations.

• Indicators such as staff morale may be impossible to quantify.• Another serious issue in practice is that once a measure is created,

it becomes difficult to adjust to changing needs as historical comparisons will be lost.

• Conversely, measures are often of dubious relevance, because history does exist.

• Furthermore, since businesses with similar backgrounds are often used as a benchmark for such measures, measures based only on in-house practices make it difficult for an organization to compare with these outside benchmarks.

• Measures are also used as a rough guide rather than a precise benchmark.

5.Resource

• A resource is any physical or virtual entity of limited availability that needs to be consumed to obtain a benefit from it.

• In most cases, commercial or even non-commercial factors require resource allocation through resource management. There are two types of resources; renewable and non-renewable

Value of a resource

• The purely economic value of a resource is controlled by supply and demand.

• This is, however, a narrow perspective on resources as there are many things that cannot be measured in money.

• Natural resources like forests, mountains etc. are considered beautiful so they have aesthetic value. Resources also have an ethical value as well, because it is widely recognized that it is our moral duty to protect and conserve them for the future generations (see sustainable development

• It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.

• A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives.

• .

Characteristics of resources

• Resources have three main characteristics: utility ( užitočnosť), quantity (often in terms of availability), and consumption. However, this definition is not accepted by some, for example deep ecologists who believe that non-human elements are independent of human values.

Types of resources• Natural resources• Natural resources are derived from the environment. • Many of them are essential for our survival while others are used for

satisfying our needs. • Natural resources may be further classified in different ways; on the

basis of origin, resources may be divided into:• Biotic - Biotic resources are those obtained from the biosphere.

Forests and their products, animals, birds and their products, fish and other marine organisms are important examples. Minerals such as coal and petroleum are also included in this category because they were formed from decayed organic matter.

• Abiotic - Abiotic resources comprise non-living things. Examples include land, water, air and minerals such as gold, iron, copper, silver etc.

• On the basis of the stage of development, natural resources may be called:

Potential Resources• - Potential resources are those that exist in a region and may be used in the

future. For example, mineral oil may exist in many parts of India having sedimentary rocks, but until the time it is actually drilled out and put into use, it remains a potential resource.

• Stock are the materials in the environment which have the potential to satisfy human needs but do not have the appropriate technology to access them.

• For example, hydrogen and oxygen are two inflammable gases present in water, but we do not have the technology to use them from water.

• Reserved Resources are the subset of stock, where use has not yet been started and are saved for future use.

• Actual resources are those that have been surveyed, their quantity and quality determined, and are being used in present times. For example, petroleum and natural gas obtained from the Mumbai High Fields.

• The development of an actual resource, such as wood processing depends upon the technology available and the cost involved. That part of the actual resource that can be developed profitably with available technology is called a reserve.

• On the basis of renewability, natural resources can be categorized into:

Renewable Resources

• Renewable resources are those that can be replenished or reproduced easily. Some of them, like sunlight, air, wind, etc., are continuously available and their quantity is not affected by human consumption.

• Many renewable resources can be depleted by human use, but may also be replenished, thus maintaining a flow.

• Some of these, like agricultural crops, take a short time for renewal; others, like water, take a comparatively longer time, while still others, like forests, take even longer

Non-renewable Resources• - Non-renewable resources are formed over very long

geological periods. Minerals and fossils are included in this category. Since their rate of formation is extremely slow, they cannot be replenished once they are depleted. Out of these, the metallic minerals can be re-used by recycling them, but coal and petroleum cannot be recycled.

• Conditionally Renewable Resources - Conditionally renewable resources are often classified as a third kind of resource, or as a subtype of renewable resources. They are dependent upon the speed and quantity of consumption, and over consumption can lead to depletion and total and everlasting destruction of the resource. Important examples are agricultural areas, fish and other animals, forests, healthy water and soil, cultivated and natural landscapes. Conditionally renewable resources are presently subject to excess human consumption and the only sustainable long term use of such resources is the so-called zero ecological footprint, when we use less than

Other resources• Human resources• Human beings are also considered to be resources. The term

Human Resources can also be defined as the skills, energies, talents, abilities and knowledge that are used for the production of goods or the rendering of services

• In a project management context, human resources are those employees responsible for undertaking the activities defined in the project plan.

• Tangible / intangible resources• Resources may be split ( môžeme deliť )into tangible and

intangible resources. Tangible resources are those resources like equipment, vehicles which have actual physical existence; whereas intangible resources are things like corporate images, brands and patents that are present but cannot be grasped or contained.

6.Resources allocation

• allocating the right amount of resources to the different parts of your business so that those assigned to particular goals have what they need to meet their objectives.

• This ranges from providing your workers with the right supplies to enacting systems by which employees receive the necessary training, all work processes are tested, and all information and data

• To effectively manage your business strategically, every inch of your company must have its needs met in these ways, so all parts can work together as a seamless, highly functioning whole.

Resource management

• In organizational studies, resource management is the efficient and effective deployment for an organization's resources when they are needed. Such resources may include financial resources, inventory, human skills, production resources, or information technology (IT).

• In the realm of project management, processes, techniques and philosophies as to the best approach for allocating resources have been developed. These include discussions on functional vs. cross-functional resource allocation as well as processes espoused by organizations like the Project Management Institute (PMI) through their Project Management Body of Knowledge (PMBOK) methodology to project management. Resource management is a key element to activity resource estimating and project human resource management.

• Both are essential components of a comprehensive project management plan to execute and monitor a project successfully.

• As is the case with the larger discipline of project management, there are resource management software tools available that automate and assist the process of resource allocation to projects and portfolio resource visibility including supply and demand of resources.

HR (Human Resource) Management

• This is the science of allocating human resources among various projects or business units, maximizing the utilization of available personnel resources to achieve business goals; and performing the activities that are necessary in the maintenance of that workforce through identification of staffing requirements, planning and oversight of payroll and benefits, education and professional development, and administering their work-life needs. The efficient and effective deployment of an organization's personnel resources where and when they are needed, and in possession of the tools, training and skills required by the work.

Techniques• One resource management technique is resource

leveling. • It aims at smoothing the stock of resources on hand,

reducing both excess inventories and shortages.• The required data are: the demands for various

resources, forecast by time period into the future as far as is reasonable, as well as the resources' configurations required in those demands, and the supply of the resources, again forecast by time period into the future as far as is reasonable.

• The goal is to achieve 100% utilization but that is very unlikely, when weighted by important metrics and subject to constraints, for example: meeting a minimum service level, but otherwise minimizing cost.

The principle is to invest in resources as stored capabilities

• The principle is to invest in resources as stored capabilities, then unleash the capabilities as demanded.

• A dimension of resource development is included in resource management by which investment in resources can be retained by a smaller additional investment to develop a new capability that is demanded, at a lower investment than disposing of the current resource and replacing it with another that has the demanded capability.

In conservation• In conservation, resource management is a set

of practices pertaining to maintaining natural systems integrity.

• Examples of this form of management are air resource management, soil conservation, forestry, wildlife management and water resource management.

• The broad term for this type of resource management is natural resource management (NRM).

Corporate Resource Management Process

• Large organizations usually have a defined corporate resource management process which mainly guarantees that resources are never over-allocated across multiple projects.

Competitive advantage• is defined as the strategic advantage

one business entity has over its rival entities within its competitive industry.

• Achieving competitive advantage strengthens and positions a business better within the business environment

Competitive advantage• is based on theory that seeks to address some of the

criticisms of comparative advantage. • Michael Porter proposed the theory in 1985. Competitive

advantage theory suggests that states and businesses should pursue policies that create high-quality goods to sell at high prices in the market. Porter emphasizes productivity growth as the focus of national strategies.

• Competitive advantage rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy.

• The other theory, comparative advantage, can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade.

Competitive advantage• attempts to correct for this issue by stressing

maximizing scale economies in goodsservices that garner premium prices (Stutz and Warf 2009).

• Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel human resources.

• New technologies such as robotics and information technology either to be included as a part of the product, or to assist making it.

7.The term competitive advantage

• is the ability gained through attributes and resources to perform at a higher level than others in the same industry or market (Christensen and Fahey 1984, Kay 1994, Porter 1980 cited by Chacarbaghi and Lynch 1999, p. 45).

• The study of such advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in the present competitive market conditions.

• “A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player” (Barney 1991 cited by Clulow et al.2003, p. 221). Successfully implemented strategies will lift a firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players (Passemard and Calantone 2000, p. 18).

To gain competitive advantage a business strategy of a firm manipulates the various resources over which it has direct control and these resources have the ability to generate competitive advantage (Reed and Fillippi 1990 cited by Rijamampianina 2003, p. 362).

Superior performance outcomes and superiority in production resources reflects competitive advantage (Day and Wesley 1988 cited by Lau

signify competitive advantage• as the ability to stay ahead of present or potential competition, thus

superior performance reached through competitive advantage will ensure market leadership.

• Also it provides the understanding that resources held by a firm and the business strategy will have a profound impact on generating competitive advantage. Powell (2001, p. 132) views business strategy as the tool that manipulates the resources and create competitive advantage, hence, viable business strategy may not be adequate unless it possess control over unique resources that has the ability to create such a unique advantage.

• Summarizing the view points, competitive advantage is a key determinant of superior performance and it will ensure survival and prominent placing in the market.

• Superior performance being the ultimate desired goal of a firm, competitive advantage becomes the foundation highlighting the significant importance to develop same.