THE INTERNAL ENVIRONMENT: RESOURCES, CAPABILITIES, COMPETENCIES, AND COMPETITIVE ADVANTAGE

8/13/2019 THE INTERNAL ENVIRONMENT: RESOURCES, CAPABILITIES, COMPETENCIES, AND COMPETITIVE ADVANTAGE

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MM 5012

BUSINESS STRATEGY AND ENTERPRISE MODELLING

SUMMARY ASSIGNMENT II

R48A

Henny Zahrany

29112551

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT

INSTITUT TEKNOLOGI BANDUNG

2014


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THE INTERNAL ENVIRONMENT: RESOURCES, CAPABILITIES, COMPETENCIES,

AND COMPETITIVE ADVANTAGE

A. The Context Of Internal Analysis Resources are the source of capabilities, some of which lead to the development of core

competencies; in turn, some core competencies may lead to a competitive advantage for

the firm.

B. Creating Value Value is measured by a products performance characteristics and by its attributes for

which customers are willing to pay. Firms create value by innovatively bundling and

leveraging their resources to form capabilities and core competencies.

C. The Challenge Of Analyzing The Internal Organization There are three conditions affecting managerial decisions about resources, capabilities,

and core competencies:

1) Uncertainty (about the firms general and industry environments and customersneeds)

2) Complexity (from the interrelationships among conditions shaping a firm)3) Intraorganizational Conflicts (exist among managers making decisions as well as

among those affected by the decisions)

D. Resources, Capabilities, and Core Competencies Resources:

There are two kinds of resources, tangible and intangible. Tangible resource consists of:

financial resources, organizational resources, physical resources, and technological

resources. While intangible resources consist of human resources, innovation resource,

and reputational resources.

CapabilitiesCapabilities are used to complete the organizational tasks required to produce, distribute,

and service the goods or services the firm provides to customers for the purpose of

creating value for them. They are often based on developing, carrying, and exchanging

information and knowledge through the firms human capital.

Core Competencies


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Core competencies are capabilities that serve as a source of competitive advantage for a

firm over its rivals. It distinguishes a company competitively and reflects its personality.

The example is: the firms marketing and advertising skills contribute to its consumer

understanding and brand-building core competencies.

E. Building Core Competencies1) The Four Criteria Of Sustainable Competitive Advantage

a) Valuable Capabilities (exploit opportunities or neutralize threats)b) Rare Capabilities (are not possessed by many others)c) Costly to imitate Capabilities (historical, ambiguous cause, and social complexity)d) Nonsubstitutable Capabilities (no strategically equivalent valuable resources)

2) Value Chain Analysis A firms value chain is segmented into value chain activities and support functions.

Value chain activities are activities or tasks the firm completes in order to produce

products and then sell, distribute, and service those products in ways that create

value for customers. Support functions: activities the firm completes in order to

support the value chain activities. The Value chain analysis and support functions

figure will be present in the exhibit.

A RESOURCE-BASED VIEW OF COMPETITIVE ADVANTAGE AT THE PORT OF

SINGAPORE

A. OPERATIONS AT THE PORTKey Operations:Key customer requirements in Port operations include freight rates, frequency of

services, shipping options, turnaround time, Port charges, support services, and feeder

operations.

Port personnel use Computer Integrated Terminal Operations System (CITOS) tocreate plans for ship berthing and for unloading containers.

B. ENABLING THE PORT OPERATIONSPSA has number of support features or enablers that make the Port operations highly

effective and help sustain its competitive edge:

Has large merchant fleet


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Largest owner of warehouse space in Singapore PSAsworkforce is trained to focus on customers Maintain productivity through investing in employee training Actively integrated its own operations as well as customer operations through the

internet, Portnet.com.

C. INNOVATIONS IN INFORMATION & OPERATIONS TECHNOLOGYSuch information and operations technology are including Tradenet, CITOS, CIMOS, etc.

All of these could reduce time, increase quality, cut costs, and create a high degree of

flexibility that gives a sustainable advantage.

D. THE RESOURCE BASED VIEW The RBV theory defines firm resources as all assets, capabilities, organizational

processes, firm attributes, information, knowledge, etc. controlled by a firm.

..What were resources in a previous industry setting maybe weaknesses, or simplyirrelevant in a new industry setting (Barney, 1991, p. 103). Teece et al have

suggested a view of advantage based on dynamic capabilities which are the firms

ability to integrate, build, and reconfigure internal and external competences to address

rapidly changing environments.

E. THE ANALYSIS

There are two natural and three additional manmade resources which have contributedto the success of the Port and PSA corporation: Singapores location, the natural

harbor, capital for infrastructure-foreign investment, IT and operations capabilities for

a Port, and IT management skills.

The combination of Singapores infrastructure, IT, operations and specialized Portequipment also contributes to the Ports competitive position.

IT management skills and Port operations and information technology combine tomake it difficult for other Ports to replicate its facilities.

Government development policies also attracted foreign investment and contributed tothe successful design and implementation by its educational and industrial policies.


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What are the main ideas of the reading materials?

Whether to enter or survive in an industry, a company must match its core competencies that

resulted from its resources with opportunities . When a company combine their external and

internal environment analysis, they could reach strategic competitiveness and above-average

returns.

What are the requirements for implementing the ideas in your own context?

To do an internal environment analysis, a company should start with determining its resources,

form their resources, they create capabilities that are often developed in specific functional areas.

From capabilities a company could build core competencies through an organizational process of

accumulating and learning how to deploy different resources and capabilities. Next we decide

which core competencies we should build and develop, the first tool by using four criteria of

sustainable competitive advantage and second by using value chain analysis.

What are practical implications for you?

It is also important to look inside rather than to look outside on which spot that could a company

fill in and determine all the possible and best way to use. We should carefully decide what

resource and capabilities that could differentiate us from the others. To determine that we could

use the two tool available, the four criteria of sustainable competitive advantage or by using

value chain analysis. This process should take regularly, we couldnt just stop at one time,

because everything is changing, so we should always aware of the external environment too.

What are the lessons learned?

It is important to supplementing strong natural resources that a company has with manmade

resources that could make its resources rare, valuable, inimitable, and nonsubstitutable. Overtime

a competitor may be able to duplicate an organizations strategic resources, so thats why a

company must consider dynamic capabilities to manage well in a changing environment.

Operation and Information technology major contribution is to create flexibility that could

enlarge/expand capacity without adding investment in plant and equipment or physical space.

Technology helps the firm utilize assets more effectively.

Documents

THE INTERNAL ENVIRONMENT: RESOURCES, CAPABILITIES, COMPETENCIES, AND COMPETITIVE ADVANTAGE