WORLD ACADEMY OF INFORMATICS AND MANAGEMENT SCIENCES
ISSN : 2278-1315
MWACC (Modified Weighted Average Cost of Capital) is a
specific or non-specific. Those resources which can only be
dynamic technique that encourages and rewards an
used for externally specialized intentions and are significant to
entrepreneurial spirit and holistic management of the firm’s
the organization in adding value to goods and services are
capital usage and profitability.It may be a cliché but you do
called specific resources.
get what you reward, and you can only reward what you can
measure. By aligning easily understandable and accepted
Non-specific resources are less specific and are less
existing KPI’s to levels at which value is created, the firm is
significant in adding value. Also resources can be broadly
now directly driving management across all functional areas
classified as tangible and intangible. The physical assets that
toward the common goal of value creation.
an organization possesses are called tangible resources and
Of course, external economic conditions fluctuate and the
final resources come under this category.
value of the firm is at the mercy of these. This technique
The intellectual resources, technological resources and the
though is immune to these external influences and reflects
organizational reputation together form the intangible
the returns management have generated from the capital
resources. The patents and copyrights of the organization are
they have consumed.
typical examples of intellectual resources. Reputation is
Financial management is the strategic partner to the business
basically goodwill that the organization has acquired among
and it should be used to drive value and strategy. Finance is
the customers. It is a critical resources of an organization.
not about keeping a score, it is about shaping the future.
Competencies
Modified Weighted Average Cost of Capital is copyright.
An organization should possess some characteristics in order
to have the ability to compete with other organizations in the
ANALYSING STRENGTHS AND WEAKNESSES AMID
market place. These characteristics form the competencies of
ORGANIZATIONAL RESOURCES, COMPETENCIES
the organization. For any organization to survive in an
AND CAPABILITIES
industry, competencies are must. At the same time
competencies cannot be useful to an organization when they
Businesses in today’s world are often faced with complex
stand alone. It is when they combine together in the right
situations that require an assessment of their position and
combination (synergy) that they help the organization to attain
identification of innovative ways to stay ahead. With the
competitive advantage. For instance, consider an information
correct strategy in place, the potential of a business can be
technology organization - for this to compete in the software
improved. SWOT (Strengths, Weakness, Opportunities and
industry, it should possess the competencies to write programs
Threats) Analysis is one technique that can be used to
and design tools which have to be combined together to
identify that strategy. It can be applied to solving both
provide the organization with the competitive advantage in the
personal and business problems. Used in a business context,
industry.
SWOT helps management to carve a sustainable niche for
the organizations market and create value addition to
Capabilities
customers and clients.
Capabilities are the ability to do something. An entity should
have capabilities for gaining competitive advantage. These
By adding value more successfully, a firm will improve its
come from using and coordinating the resources and
profitability, by reducing costs or improving sales. Some of
competences of the entity to create competitive advantage.
the extra benefit might be passed on to the customers, in the
Capabilities arise from a complex combination of resources
form of a better-quality product or services or a lower
and core competences, and they are unique to each business
selling price. If so, the business entity shares the benefits of
entity. Each business entity should have capabilities that rivals
added value with the customers, and gains additional
cannot copy exactly, because the capabilities are embedded in
competitive advantage.
the entity and its processes and systems.
Added value does not have to be given immediately to
customers (in the form of lower prices) or shareholders (in
A resource-based view of the firm is based on the idea that
the form of higher dividends). The benefits can be re-
strategic capability comes from the distinctive capability of
invested to create more competitive advantage in the future.
the entity to use its resources and competences to provide a
Therefore, assessment and evaluation of the organizations
platform for achieving long-term strategic success. Therefore,
resources, competencies and capabilities is paramount for a
when a distinctive capability is able to continue functioning
successful implementation of appropriate strategy (e.g.
over a period of time it is said to be sustainable. When the
corporate strategy, financial strategy and investment
organization which holds a distinctive capability is able to
strategy) for effective business performance.
benefit mainly from it, the distinctive capability becomes
appropriable. An organization can derive distinctive
capabilities mainly from the organizational architecture,
Resources
These are the activities and processes of an organization
organization reputation and innovation. The relationships
utilizing certain assets. These assets are called resources.
between the organization and the stakeholders are critical in
These resources can be created within the organization.
developing these three aspects of the organization.
They form the internal resources. Such generated resources
are organization-specific. Otherwise they could be obtained
Assessing resources and competences
externally from the suppliers available in the resource
markets, therefore forming the external resources. The
In addition to assessing the external environment or
externally obtained resources are organization-addressable.
ecosystem, including markets and competitors, strategic
In addition, resources can be categorized as
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ENDEAVOR 2019 | WAIMS ACADMIC PRESS
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