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Strategy Dynamics Course - Class 5 – Resource attributes

NOTE: The frameworks in this class can be applied on their own, as well as being used as part of a more complete business model.

This class explains how the varying quality of resources – larger or smaller customers, more or less appealing products, more or less experienced staff and so on – affects an organization’s performance.

These qualities - or attributes - rise or fall alongside changes to the resource itself, in just the same way as adding hot or cold water changes the temperature of a tank or bathtub. The class shows how to work out the speed with which changes occur to an attribute, and how these changes work through to drive performance over time. The class also explains how a resource can exhibit a quality-distribution, for example when customers vary in size or staff vary in experience.

The class includes examples of purchase-rates for consumers of a popular drug product, capacity of production units for a manufacturing company, experience-levels for a company’s sales force, customer-value and service demand for an IT-support company, and the changing value, income and risk for a bank’s portfolio of customer loans.

Key issues addressed

  • The attributes associated with resources that describe their quality and their contribution to performance
  • Understanding how those attributes improve and deteriorate as resources are added or lost
  • Implications for developing human resources, product range, and other functional issues
  • Using the quality-distribution of resources to decide where to focus efforts at improving performance
  • Situations when resources bring with them the potential to access others
Class 5.0 – Resource Attributes: Summary - (43 min)
This class looks at the attributes of resources and how to look at these as a resource co-flow. It goes on to consider the use of the quality-curve for analysis of resources and their co-flows. This is demonstrated by an example of the impact that changing customer quality can have on a whole business’s performance.
Class 5.1 – Attributes: Doing it right! - (21 min)
There are some easy traps to fall into when looking at evaluating co-flows and this segment looks at how to track changes to resources and their co-flows.
Class 5.2 – Working with the customer quality-curve - (11 min)
This segment looks at the quality–curve for customers in more detail and considers some actions that may be indicated. This can be used to decide on closing poor-quality customers, but traps in this analysis means you need to be careful. An alternative to closing poor customers is to improve the quality-profile.
Class 5.3 – Resources with multiple attributes - (24 min)
A resource may have more than one important attribute. Each is handled in the same way, and the class includes an example of how two customer attributes can impact on the performance of a whole business. A further example is given of multiple attributes for a bank's loan-book – an issue that explains the sub-prime lending crisis of 2008-09.
Class 5.4 – When one resource brings access to another. - (21 min)
A special case arises when an attribute of one resource consists of access to another resource that is also important – but that is usually only potential resource that needs to be developed. The danger is that the secondary resource you can access falls in quality and in extreme cases, this can damage profitability.
This course is supported by a series of worksheets provided in both PDF format and as Sysdea online models.
Access to two Sysdea models are provided with the Summary course: Examples used are:

Over-the-counter drug consumer attributes.
This model plays out changes to sales of the popular drug product arising from the gain and loss of consumers with higher or lower purchase rates (plus the impact of changing purchase rates by current consumers).

Sales force size and experience.
This case concerns the efforts of an international producer of electrical equipment to grow the sales force for one of its product lines in China. It wanted 200 sales people with 3 years' experience by quarter 20 (current time = end of quarter 8). The hiring market is very competitive, so it has suffered 30% turnover and has lost its most experienced people (2 years more than average), and it can only hire people with 1 year of experience.

When enrolment includes Class 5 in full there is also an extended version of the sales force size and experience model and a (read-only) model for bank lending and risk that plays out changes to the number, value, interest income, and risk for a bank’s portfolio of loans, reflecting choices it makes for the risk it is willing to accept, the interest rate it charges, and the marketing it will spend to promote its loans. It also calculates the interest income, bad-debt write-offs, admin charges and profits that result.

free access for teachers - login or register Additional materials are available to registered teachers as well as free access to the complete course. Login here or register here for more information.

Books

Prahalad, C.K. (2005) The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Wharton School Publishing, Upper Saddle River NJ.
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(eds) Gratton, L., Hope Hailey, V., Stiles, P. and Truss, C. (1999) Strategic Human Resource Management: Corporate Rhetoric and Human Reality, Oxford University Press, Chapter 9
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Doyle, P.and Stern, P., Marketing Management and Strategy (4th edn), (2006), Pearson, Harlow
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