Resources. As Murphy states, output is determined by the number of inputs available. As described by economists, resources are the ‘inputs’ as the elements of production (2005). Resources can be classed as tangible or intangible factors and can be subdivided into financial assets (for example, issued shared capital, cash, bank loans or bonds) and physical assets (for example, raw materials and machinery). Examples of these factors have been provided in figure 7.
Figure 7.0 Tangible and Intangible factors
While financial assets are used to assist a company’s long-term of ‘product to output’ assets and helps maintain the working capital to achieve day-today expenses. Analysis of these financial assets and the company’s shareholders (for example, structure of shareholders, owners etc) should be included in the competitive intelligence analysis process as these items will influence the company’s strategy and business culture.
Physical assets contain land or premises, stock (also known as inventories), technology and equipment, such as tools, machinery and fixtures. Land/premises in this context refers to the company’s property portfolio and can be of significant value if the property if ‘freehold’. This can also be classed as a major component of the company’s assets regardless of the main focus of their activities. In the manufacturing and utilities industries, stocks of raw materials are required to fulfil their production. The poor management of this stock can contribute to a company’s reputation and affect their bottom line. Technology covers a wide range of items including plant and machinery, technology systems, the company’s fixtures and fittings, furniture, tools and transport. The quality of these assets is critical to a company’s success, especially when superior technology can provide significant competitive advantage. This applies not only in leading-edge technology industries, but also in the service sectors.
Included in this category are the intangible assets such as management, Human Resources, Corporate Knowledge, alliances and business processes which all attribute to a company’s reputation. For example, the competitive intelligence element of Human Resources would identify the demographic profile of the staff and can provide an insight into both the company culture and their strategic situation. For example, tele-working and staff locations, outsourcing of critical functions like security, and IT services to external contractors.
In partnership with a company’s culture, is Corporate Knowledge, as described by Murphy, “is a company’s principal asset and source of competitive advantage in a knowledge economy” (2005, pg 32). In an attempt to preserve and develop this fundamental, knowledge management was recognised and gained corporate acceptance to record, store, organise and retrieve corporate knowledge. By the late 1990’s, knowledge management was included as a balance sheet item in the same way as other traditional categories (i.e. turn-over, number of employees etc) were measured. While it is academically acknowledged that knowledge is crucial for a company to compete and is the process by which “the organisation generates wealth from its knowledge or intellectual capital” (Bukowitz & Williams, 2000), applying this concept in practice can be difficult when corporate knowledge is the ‘know how’ (tacit knowledge) of its people and there is a requirement for employees to have a total trust and are willing to share their tacit knowledge.
Business processes and Alliances include activities like research and development (R&D), production, marketing, establishing and maintaining external suppliers/resources (i.e. alliances). It is acknowledged is that the more efficient business processes are, the greater that a company will succeed in achieving greater returns from the use of resources. Likewise, weaknesses in this process can undermine a company’s performance. This concept was explored by Porter who identified that “a business must undertake to create the goods or services it offers and deliver into the hands of the customer” (Murphy, 2005). This is known as Porters value chain and is shown in figure 7.1.
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