Business Resource Needs (VCE SSCE Business Management): Revision Notes
Business Resource Needs
Introduction
Effective business planning requires continuous attention to resource requirements. Businesses must ensure they have the right resources to produce quality products in the quantities customers demand. Resource needs vary depending on the type of business and will change as the business grows, enters new markets, or expands its product range.
Resource needs are dynamic and will evolve as your business develops. A small startup will have very different resource requirements compared to an established enterprise operating across multiple markets.
Types of business resources
Businesses require three main categories of resources to operate effectively.
Natural resources
Natural resources are materials extracted from the environment that remain unprocessed. These include water, oil, sunlight, timber, and raw agricultural products like fruits and vegetables.
The specific natural resources a business needs depend on its operations. For example, a restaurant requires suppliers of fresh produce such as fruits and vegetables. A construction company might need timber or stone.
Sustainability Matters
Modern businesses face increasing pressure to source natural resources sustainably. Community expectations and government regulations now require businesses to use environmentally friendly resources. A procurement policy helps guide these decisions—this is a set of guidelines that reflects the business's values and mission, ensuring suppliers meet required environmental and ethical standards.
Real-World Resource Needs:
- A restaurant needs fresh produce (fruits, vegetables), water for cooking and cleaning, and energy for refrigeration
- A construction company requires timber or stone for building materials, water for concrete mixing, and fuel for machinery
- A manufacturing plant needs raw materials specific to their product line, water for cooling systems, and energy for production lines
Labour (human resources)
Labour refers to the human physical and mental effort—including skills and knowledge—needed to create products or deliver services. For instance, a restaurant employs waiting staff and kitchen workers to serve customers and prepare food.
Managing human resources effectively is crucial for business success. This involves overseeing employees through all stages of their employment journey. Businesses use workforce planning to forecast future staffing needs and ensure they can meet demand. Workforce planning is the ongoing process of predicting how many employees with specific skills will be needed and taking steps to secure them.
Effective Human Resource Management Requirements
To maintain a sufficient and sustainable supply of labour with the right skills, businesses must:
- Employ staff with appropriate skills and qualifications whilst complying with legal requirements around equal opportunity, fair wages, and workplace safety
- Provide training to develop employee skills continuously and meet evolving business needs
- Monitor employee turnover rates and investigate reasons why staff leave
The goal is to maintain a sufficient and sustainable supply of labour with the right skills to keep the business operating at the required standard.
Capital resources
Capital resources are human-made items used during production. These include machinery, equipment, buildings, vehicles, and technology. A restaurant's capital resources might include kitchen equipment, point-of-sale systems, coffee machines, tables, and chairs.
Managing physical capital resources is an ongoing cycle requiring constant attention. Businesses must:
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Negotiate purchasing or leasing arrangements for buildings, equipment, and other necessary items. This involves deciding whether to buy or lease assets based on financial considerations.
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Service and maintain equipment regularly. This often requires contracts with service providers and establishing clear maintenance schedules to prevent breakdowns and ensure optimal performance.
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Replace capital resources when they reach the end of their useful life. Items like vehicles, IT equipment, and software eventually become outdated or unreliable and need replacement.
Proper management of capital resources ensures production continues smoothly and quality standards are maintained. Neglecting maintenance or delaying replacements can lead to costly breakdowns, production delays, and safety hazards.
Factors affecting choice of resources
When selecting resources, businesses must make careful decisions based on several key factors. Resource planning is ongoing, and businesses should consider the following:
Quality
Selecting suppliers who provide high-quality resources is essential for maintaining production standards. Quality inputs lead to quality outputs. If a business uses poor-quality materials or employs inadequately skilled workers, the final product will suffer, making the business less competitive in the market.
Exam tip: When evaluating resource choices, consider how quality affects the final product and customer satisfaction. Higher quality resources often cost more initially but can reduce waste, rework, and customer complaints.
Reliability
Reliable suppliers deliver the required resources on time and in the correct quantities. This reliability enables businesses to maintain consistent production schedules and meet customer demands. Unreliable suppliers can cause production delays, stockouts, and lost sales, damaging the business's competitiveness and reputation.
Businesses should establish strong relationships with dependable suppliers and may choose to work with multiple suppliers for critical resources to reduce risk. This strategy, known as supplier diversification, protects against supply chain disruptions.
Corporate social responsibility
Modern businesses must consider their ethical and social impact. To build and maintain a reputation for responsible business practices, companies must select suppliers who share similar ethical standards. This includes:
- Environmental sustainability practices
- Fair treatment of workers
- Ethical sourcing of materials
- Community engagement
Choosing suppliers with strong corporate social responsibility credentials helps businesses meet stakeholder expectations and can enhance brand reputation, particularly with environmentally and socially conscious consumers.
Exam tip: When analysing resource decisions, consider both short-term costs and long-term reputational benefits of choosing ethical suppliers. What appears more expensive initially may provide significant competitive advantages over time.
Business support services
Businesses can access various support services to help with resourcing decisions:
Formal support sources:
- Legal advisors (lawyers) for contractual matters
- Financial advisors (accountants and bankers) for funding decisions
- Specialist consultants for marketing, insurance, IT, and other business services
- Government programs at federal, state, and local levels
- Community organisations including business incubators and mentoring services
Informal support sources:
- Previous business owners who can share experience
- Business networks for advice and contacts
- Complementary businesses that can provide insights
- Even competitors, who may share non-sensitive information through industry associations
Don't underestimate the value of informal support networks. Many successful business owners credit mentors and peer networks as critical factors in their ability to make sound resource decisions, especially in the early stages of business development.
Key Points to Remember:
Three Types of Business Resources:
- Natural resources - Raw materials from the environment (unprocessed materials like water, timber, agricultural products)
- Labour - Human effort and skills needed for production and service delivery
- Capital resources - Human-made equipment and machinery used in production
Critical Management Concepts:
- Workforce planning is essential for forecasting and meeting future staffing needs
- Physical resource management is ongoing and includes procurement, maintenance, and replacement
- Modern businesses must prioritise sustainable and environmentally friendly resource sourcing
Resource Selection Factors:
- Quality - Maintaining production standards and ensuring quality outputs
- Reliability - Ensuring consistent supply and meeting customer demands
- Corporate social responsibility - Maintaining ethical standards and building reputation
Key Terms:
- Natural resources: Raw materials from the environment
- Labour: Human physical and mental effort in production
- Workforce planning: Forecasting and securing required employees
- Capital resources: Human-made production equipment
- Procurement policy: Guidelines for selecting suppliers ethically