3 Joe Lawson is founder and Managing Director of Lawson Engineering, a medium sized, priva

business specialising in the design and manufacture of precision engineering products. Its customers are major

industrial customers in the aerospace, automotive and chemical industries, many of which are globally recognised

companies. Lawson prides itself on the long-term relationships it has built up with these high profile customers. The

strength of these relationships is built on Lawson’s worldwide reputation for engineering excellence, which has

tangible recognition in its gaining prestigious international awards for product and process innovation and quality

performance. Lawson Engineering is a company name well known in its chosen international markets. Its reputation

has been enhanced by the awarding of a significant number of worldwide patents for the highly innovative products

it has designed. This in turn reflects the commitment to recruiting highly skilled engineers, facilitating positive staff

development and investing in significant research and development.

Its products command premium prices and are key to the superior performance of its customers’ products. Lawson

Engineering has also established long-term relationships with its main suppliers, particularly those making the exotic

materials built into their advanced products. Such relationships are crucial in research and development projects,

some of which take a number of years to come to fruition. Joe Lawson epitomises the ‘can do’ philosophy of the

company, always willing to take on the complex engineering challenges presented by his demanding customers.

Lawson Engineering now faces problems caused by its own success. Its current location, premises and facilities are

inadequate to allow the continued growth of the company. Joe is faced with the need to fund a new, expensive,

purpose-built facility on a new industrial estate. Although successful against a number of performance criteria, Lawson

Engineering’s performance against traditional financial measures has been relatively modest and unlikely to impress

the financial backers Joe wants to provide the necessary long-term capital.

Joe has become aware of the increasing attention paid to the intangible resources of a firm in a business. He

understands that you, as a strategy consultant, can advise him on the best way to show that his business should be

judged on the complete range of assets it possesses.

Required:

(a) Using models where appropriate, provide Joe with a resource analysis showing why the company’s intangible

resources and related capabilities should be taken into account when assessing Lawson Engineering’s case

for financial support. (12 marks)