What is Resources ?
The term "resource" has evolved from the Latin word "resurgere", the meaning of which is "to rise". It refers to the means that are used to accomplish desired goals. Resources can be anything that can be utilized to obtain something valuable. These resources can be anything ranging from assets owned by the organisation to skills, knowledge, competencies, etc. Resources, if utilized optimally, provide a competitive edge to the organisation and its operations. But, if not properly utilized, these resources may act as weaknesses also.
For example, manpower is a resource which can be strength for an organization if nurtured properly. However, the same manpower becomes a weakness if not harnessed to the fullest. If the organization does not invest in training its employees and developing them into a world class labour force, then their productivity reduces and impacts the organization's at performance. The measurement of strengths and weaknesses of these resources can be done on three bases, i.e., past performance of organization, key competitors of organization, industry and environmental factors affecting organization. Resources can be classified into two basic categories. i.e., tangible resources and intangible resources. Tangible resources are those assets that can be touched and seen, such as land, building, machinery, plant, etc. While intangible resources are those assets that cannot be touched, such as brand name, research and development, patents, etc.
Resources can also be classified as per the functions of an organization, such as human resource, technologies implemented, financial resources, etc. A resource can be called as a strategic asset when it is distinctive and different from that of the competitors. It is considered distinctive when it is superior to those of the company's competitors. A resource is considered distinct if it can satisfy three conditions :
1) Value :
It should give a very high perceived customer value.
2) Unique :
It should be unique in comparison to its competitors.
3) Extendibility :
It should be capable to be extended to new and better products.
Types of Resources
Resources are basically of two types :
1) Tangible Resources :
All those assets that exist physically and can be touched and felt are called as the "tangible resources". These resources are the land, building, plant, machinery, etc., that allow the firms to achieve profitability. Tangible resources are usually purchased and hence can be valued on monetary basis. One of greatest challenge with tangible resources is that some of these resources depreciate over time, such as machinery, building, vehicles, etc. It is treated in the profit and loss statement of a firm.
A major benefit of tangible resources is that the valuation of these resources is possible and can be shown in the balance sheet. But, a significant challenge in determining the value of the tangible resources is that the firm cannot gain additional advantage from these resources.
2) Intangible Resources :
An intangible resource is a resource owned by a company that does not have a physical form- it cannot be seen or felt by a person. These resources can be the logo of an organization, information, skills, technologies, etc. Patents for important discoveries and inventions cannot be seen but these are the long term source of revenue for the company. Similarly, the goodwill of a company cannot be felt or seen but it reflects in the market position that the company commands or the increase in the net asset value of the company.
The intangible assets of a company are assigned a market value based on the future income that the company is likely to earn from these assets. Although it becomes difficult to assess the value of these resources in monetary terms, some of the significant intangible resources are typically treated and valued in the financial statement. The intangible assets of a company are considered more superior to the tangible assets. In the current knowledge economy the growth of companies like Microsoft and Infosys bears testimony to the value of intangible resources. In fact the most critical aspect of a company is its capacity to turn intangible resources like human intellect and judgement into superior products and services. A perfect example of this is a company like Apple which churns out superior products which are trend-setters because of its excellent human resource. There is a lot of evidence that the value of intangible resources is growing more than tangible resources in the global economy.