- Identify three key resources in your organization and classify them as tangible and intangible.
- Identify two key capabilities that your organization possesses. Compare these capabilities with that of your (all 5) competitors and rate them as superior or inferior. Provide evidence to support you rating.
- Identify one core-competency for each of the product segments you are competing in and justify why do you consider the stated function as a core competency.
Solution
1-Resources:
Resources represent the assets of the company. These can be either tangible or intangible in nature. The resources become the sources of the capabilities of a firm. In terms of the company, Erie, the following are three key resources which have been identified.
Three Key Resources of Erie
a-Financial Capital (Tangible)
The ability of the company Erie to borrow is it’s one of the main financial resources. This is also evident in the balanced scorecard points of leverage. The company has earned a full score of 8 points in terms of leverage. Erie has scored leverage ratio of 2.29 which is a good score of leverage. The leverage ratio of 2.29 shows the company has financed more than 50% of its assets from debt financing depicting its financial resource.
b-Physical Resources (Tangible)
The physical resources of the firm are exhibited in the form of plant and equipment of the company and terms of its accessibility to the raw materials. The company plant has capacity to produce 1400 units in traditional market, 1500 units in a low-end market segment, 450 units in the high-end market segment, 350 units performance market segment, and 400 units in the size market segment.
c-Reputational Resource (Intangible)
This is the resource that the company possesses in the shape of brand name, its reputation with the customers, its perception of reliability, and quality of the products. The products Erie in the shape of Egg and Eat has shown the customer accessibility of 48% and 80%, respectively while the customer satisfaction for Egg product is 23. The overall accessibility of the company products is just below 40%. These figures show that this resource can be better utilized to improve.
2-Capabilities:
The ability of Erie to deploy its resources in an integrated manner to achieve the desired goals shows its capabilities. The capabilities are usually sourced from the combination of tangible and intangible resources.
Two Key Capabilities
a-Learning and Growth Capability:
The learning and growth capability of the company is represented by the retaining, motivating, and empowering capabilities of the human resource of the firm. The balanced scorecard of the company Erie shows a full score of 14 points in terms of learning and growth perspective. This metric of learning and growth is measured based on employee turnover, employee productivity, the Sales/Employees ratio, etc. The Report shows that overtime is 0%, which is a good sign. The productivity index shows 102.3% of productivity, which means that around 98% of the employees is better trained and capable of completing the jobs. In comparison, Andrews has 103.8% productivity index, Baldwin has 102.3%, Chester has 1-3%, Digby shows 102.3%, and Ferris shows 105%. The turnover rate is 9%, which is comparatively on the lower side as other companies like Digby is showing 11.5% turnover rate. The number of separated employees is also only 23 which is the second-lowest showing the low cost of separations bore by the company.
b-Managerial Capabilities:
The managerial capability of the company is evident from the formal planning, coordinating, and controlling systems. This is depicted in the Internal Business Processes Score of the Balanced Scorecard. The measurement of the Internal Business Processes Points is based on the performance in terms of the company operating profits, its plant utilization, its contribution margin, its days of working capital, and its inventory carrying costs and stock up costs. The balanced scorecard shows points of 23.1 out of 25 total points for these metrics. The plant utilization for Erie has been more than 100% for all of its products and market segments. Comparatively, it is the lowest among all companies as other companies are utilizing their plants by more than 120%. Only Ferris is shown using less than its capacity. The contribution margin for Erie is also 27.4%, which is slightly on the lower side relative to its competitor but is a good margin. The operating profit or EBIT of the company is positive at $1228 as of December 21, 2021, which is way lower than Andrews, Baldwin, Chester, Digby, and Ferris. The working capital of the company is good with total current assets of $51,022 and total current liabilities of $36294 (sum of current debt and Accounts payable).
3-Competencies:
There are five product segments of Traditional, Low End, High End, Performance, and Size. For core-competency, the resources and capabilities are needed to be a source of competitive advantage. This shows that these should be rare, valuable, non-substitutable, and costly to imitate. Using these criteria, for each of the product segments, the identified core competencies of Erie are shown below.
Core Competency for Each Product Segment
a-Traditional Segment:
In this product segment, the company Erie product Eat is ranked 6th in terms of the units sold. The core competency of the firm in this product segment is depicted in the high customer accessibility of 57% and customer awareness of 80%, even with the lowest promotional budget. Other companies have spent higher budget; however they have not been able to yield same results in terms of customer awareness and accessibility.
b-Low-End Segment:
Ebb is the product which is positioned in this product segment against competitors at the 6th rank in terms of the number of units sold. The company’s core competency is similar here to the traditional product segment as it has spent only $1250; however, it has yielded customer accessibility of 53% and customer awareness of 72%. This is the lowest promo budget among all products in this category.
c-High-End Segment:
Echo is the product of Erie in this segment, which is ranked 4th among competitors in terms of market share. The company sales budget has been lowering at $1500, and its promo budget has been $ 1000 however, it has been able to get customer satisfaction of 19.
d-Performance Segment:
In this segment, Edge is the last ranked product. However, it is important to note that the potentially sold units have been lower than the actual units sold showing the potential of high sales in future.
e-Size Segment:
In terms of this segment, Egg and Eat are the company products. The core competency is presented in the form of a high utilization of the promotional budget for Egg products with reaching 80% of the customer awareness.
