Question

Strategic Management

What are the differences between tangible and intangible resources? Why is it important for decision makers to understand these differences? Are tangible resources more valuable for creating capabilities than are intangible resources, or is the reverse true? Why?

Answer 1

Answer:
At Chegg we try to help student and solve your queries. Do give a upvote for the answer and the efforts put in. It helps us improve and answer better.

Tangible resources are those which earn an economic benefit by production or distribution of goods, the provision of services or the rental of the resources to others. They include equipment, land and vehicles, and all that which can be described in terms of their physical presence. They can be categorised into the following:

•Financial resources, such as borrowing capacity

•Organizational resources, such as its formal reporting structure and systems

•Physical resources, such as location
Technological resources, such as patents and trademarks

Intangible assets are those which does not have a physical form. They have a market value based on their anticipated income to be generated. They can be classified as:

•Human resources, such as knowledge, trust, and managerial capabilities
•Innovation resources, such as scientific capabilities and capacity to innovate
•Reputation resources, such as the firm's reputation with customers or suppliers
•Reasons why it is important for decision makers to understand:

i) For developing resources into competitive advantages

ii) To upgrade the resources in alignment with the vision and mission of the company

iii) In assessing whether the resource is rare, inimitable, durable

Yes,tangible resources are more valuable for creating capabilities as they are directly linked with the production and delivery of goods and services. For example Wal-Mart has a large network of stores which are tangible resources and this provides it with a capability of reaching to large number of customers. But on the other hand brand image of the company only helps it to attract the customers.