What is Resource Gap Analysis?

Written by renee o'farrell
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Gap analysis looks at the current state of a situation, a market, a product, a resource and so forth and compares that to target levels of performance. Resource gap analysis, a subset of gap analysis,focuses solely on the resources held by a company or organisation, including both the current levels and the estimated future needs thereof. In other words, resource gap analysis examines the gap between a company's current resources and what resources will it need to satisfy future needs. Applications of this important, versatile tool range from human resources to mergers and acquisitions to purchasing.

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Function

Competitive advantage arises from an organisation's resources. An organisation bases its competitive advantage on tangible resources, such as buildings and equipment, and intangible resources, such as brand power, patents and capabilities. Such resources enable the organisation to create a product or provide a service that is more profitable than its competitors. Basically, resources provide a competitive advantage if they contribute to the perceived value of a product or service.

By performing resource gap analysis, a company can gain a better understanding of the resources it currently has and those resources needed to achieve its goals.

Features

After the analyst isolates the disparity in resources, the company can devise a plan of action to mitigate that gap. Thus the process of resource gap analysis boils down to simply brainstorming resources that the company currently possesses, generating a quantification of levels of those resources that are necessary to reach forecasts--think sales volume, production and similar variables--and then formulate a plan to acquire those amounts, via purchasing, hiring, and so forth.

Significance

A business manager needs to determine which resources to develop or acquire. Thus she needs to continually evaluate resource capability and forecasted need for the perceived value it contributes, especially compared to competitors, the industry at large and new technology developments. She should evaluate the picture from a variety of viewpoints, to determine both the quality and importance of that resource.

Considerations

A resource must have five qualities to be seen as contributing to competitive advantage: it must be valuable, durable, rare, difficult to imitate and complex. That is, the resource must be valuable in that it contributes to the value perceived by the customer. It must also be durable, meaning that it is not temporary. It must be rare as well; many other companies should not possess this competitive resource. The resource must too be difficult to imitate and difficult to understand.

The analyst must also critically evaluate the relative importance of the resource in question.

Misconceptions

Resource gap analysis is sometimes confused with value-chain analysis, which focuses instead on the value added throughout the process and the company's strategic position in relation to its competitors.

That said, the two types of analysis are used together quite well and frequently are. By combining resource gap analysis with value-chain analysis, two primary benefits are achieved: the value-chain analysis benefits from having a point of comparison by which to gauge performance, and the resource gap analysis benefits because only those resources that contribute to competitive advantage are analysed, saving time and money.

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