The amount of information and research available on the topic of this blog is never ending. Therefore, I will discuss briefly the ability of Acqudev to identify our strengths and weaknesses within the concept of a Resourced-Based View. Due to the nature of Acqudev’s youth, we will not have the same strengths and weaknesses that a much larger and better capitalized company has. Describing Acqudev at the moment could be done in a few simple words: effective, lean, hungry, ethical. Most all other companies within commercial real estate development cannot decribe themselves in the same way. Perhaps they could, but most try to be too many things for too many people. Here are Acqudev we know who we are, what we are doing, and where we are going. That is why I am comfortable talking about our strengths and weaknesses so openly. If a possible client partner or tenant happens to see our blog, then they can see our journey as we grow. We are not perfect, but we do seek perfection. Mistakes will happen and the purpose of these analysis are to discover where a firm is strongest and most vulnerable.
Penrose’s Theory of Firm Growth
Edith Penrose’s 1959 book title The Theory of the Growth of the Firm discussed a lot about resources and how those play into a firm’s competitive advantage. Penrose’s purpose in the book was to determine the process through which firms grow and the limits of growth. I believe Penrose’s theory to be superior to others due to the fact that Acqudev is in the service industry and not manufacturing. Essentially, we provide a service that produces a finished project on time and on budget. Penrose argues that firms should first be understood as an administrative framework that links and coordinates numerous activities from individuals and groups and second as a bundle of productive resources. According to Penrose, the growth of a firm is limited by the productive opportunities that exist as a function of the bundle of productive resources controlled by a firm and the administrative framework used to coordinate the framework of these resources.
Resource Categories
Financial Capital: Includes all the different options for funding that a firm can use to conceive and implement strategies.
Physical Capital: Items such as technology, PP&E, access to raw materials (land, engineers, etc), and geographic location all make up this category.
Human Capital: The training, experience, expertise, judgement, relationships, and insight of individual managers and workers in a firm are critical in this category.
Organizational Capital: the collection of individual human capital wrapped into its entirety. This includes Penrose’s administrative framework, formal and informal planning, controlling, and coordination of systems and processes. In addition, it is fair to categorize the firm’s culture and relationships within its industry into the organizational capital resource.
Utilizing the above resources, Acqudev can start to break down its strengths and weaknesses. Financial capital is not a resource we have pursued due to the more consultative nature of what we are currently doing. If we decide to branch out into our own projects, meaning we do not have a partnership with a project owner and own the project, then this will be a weakness. Like most obstacles this can be overcome by seeking capital through investors, banks, entrepreneurs, and other creative financing options. Physical capital is currently a strategic strength for us due to being located in Nashville, TN. We are centrally located to service Tennessee and Kentucky with the ability to extend our service radius when the time comes. At the same time, this could become a weakness as we grow and projects become farther outside of our geographic location and more travel is required. Human capital is our biggest strength at the moment and will likely be our biggest going forward. We continue to educate ourselves both with day to day issues that arise as well as academically. In addition, being a part of commercial real estate development professional organizations such as NAIOP and ICSC is starting to improve our knowledge on a broader scale in areas outside our expertise. Lastly, Organizational capital is both a strength and a weakness to Acqudev as we have not built an aggressive organization due to a focus of automation and lean management. As we continue to move forward, we will continue to build relationships in day to day operations along with our professional organizations. These relationships will be critical in the future of our growth.
Until next time!
Winston W. Parks