What Are the Internal Factors That Strongly Affect an Organisation’s Present and Future Performance? Critically Evaluate the Role of Firm-Specific Resources as an Element of an Organisations Strategy Formulation and Implementation

3042 Words Sep 27th, 2012 13 Pages
Introduction There have been numerous papers written on the subject of firm specific resources and their link to sustainable competitive advantage for a firm. I will start by explaining some key terms that will be used in the analyses of firm-specific resources. I will then outline the internal factors, and their effect on an organisations performance. Finally I will focus on the resource-based view of the firm in order to critically evaluate the role of firm specific resources.

Strategy Formulation
Strategy formulation is a process in which an organisation must; • Evaluate current performance • Review corporate governance • Scan the external environment • Scan the
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Therefore, it is evident that in order for a firm to understand its competitive position and formulate strategy, some degree of environmental knowledge is necessary. Internal environment scanning would allow an organisation to understand their present performance, however external scanning is crucial to anticipate future performance, avoid strategic surprise, and ensure long-term profits.

The internal (firm-specific) environment refers to the organisations resources and capabilities, organisational structure and organisational culture. Each of these are resources that need to be analysed as part of the internal scanning.

1. Resources
The definition of resources taken from Barney is; Firm Resources include all assets, capabilities, organisational processes, firm attributes, information, knowledge etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness (Daft, 1983; cited by Barney 1993)
We will know explore the concept in more detail.

1. Resource-based Theory of the Firm

In 1999, Fahy and Smithee wrote that the resource-based view of the firm was one of the latest strategic management concepts. The RBV has been growing in popularity since the mid 1980’s. (Fahy and Smithee, 1999). The main role of the
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