The Internal Environment

THE INTERNAL ORGANIZATION: RESOURCES, CAPABILITIES,
CORE COMPETENCIES, AND COMPETITIVE ADVANTAGES
NAME: Rd.Indra Adika P.

NIM : 29114810
CLASS: YP51B
MASTER OF BUSINESS ADMINISTRATION

INSTITUT TEKNOLOGI BANDUNG
2015
THE INTERNAL ORGANIZATION: RESOURCES, CAPABILITIES, CORE

COMPETENCIES, AND COMPETITIVE ADVANTAGES
Competitive advantages and the differences they create in firm performance are often
strongly related to the resources firms hold and how they are managed. Resources are the
foundation for strategy, and unique bundles of resources generate competitive advantages
that lead to wealth creation. As Apples experience shows, resources must be managed to
simultaneously allow production efficiency and an ability to form competitive advantages
such as the consistent development of innovative products.
To identify and successfully use resources over time, those leading firms need to think
constantly about how to manage them to increase the value for customers who are
arbiters of value as they compare firms goods and services against each other before
making a purchase decision. As this chapter shows, firms achieve strategic
competitiveness and earn above-average returns when their unique core competencies are
effectively acquired, bundled, and leveraged to take advantage of opportunities in the
external environment in ways that create value for customers.
Analyzing the Internal Organization

The Context of Internal Analysis.
Increasingly, those who analyze their firms internal organization should use a
global mind-set to do so. A global mind-set is the ability to analyze, understand,
and manage (if in a managerial position) an internal organization in ways that are
not dependent on the assumptions of a single country, culture, or context.

Analyze firms portfolio of resources and bundle heterogeneous resources and
capabilities (Understand how to leverage these bundles)

An organization's core competencies creates and sustains its competitive
advantage.
Creating Value
By exploiting their core competencies to meet if not exceed the demanding standards of
global competition, firms create value for customers. Value is measured by a products
performance characteristics and by its attributes for which customers are willing to pay.
Firms with a competitive advantage offer value to customers that is superior to the value
competitors provide. Firms create value by innovatively bundling and leveraging their
resources and capabilities. Firms unable to creatively bundle and leverage their resources
and capabilities in ways that create value for customers suffer performance declines.
The Challenge of Analyzing the Internal Organization
The strategic decisions managers make about the components of their firms internal
organization are non routine, have ethical implications, and significantly influence the
firms ability to earn above-average returns. These decisions involve choices about the
assets the firm needs to collect and how to best use those assets.
Making decisions involving the firms assetsidentifying, developing, deploying, and
protecting resources, capabilities, and core competenciesmay appear to be relatively
easy. However, this task is as challenging and difficult as any other with which managers
are involved; moreover, it is increasingly internationalized . The challenge and difficulty
of making effective decisions are implied by preliminary evidence suggesting that onehalf of organizational decisions fail. Sometimes, mistakes are made as the firm analyzes
conditions in its internal organization.
Thus, difficult managerial decisions concerning resources, capabilities, and core
competencies are characterized by three conditions: uncertainty, complexity, and intra
organizational conflicts.
Condition
Uncertainty
Regarding characteristics of the general and the
industry environments, competitors actions, and
customers preferences
Condition
Complexity
Regarding the interrelated causes shaping a firms
environments and perceptions of the environments
Condition
Intraorganizational Conflicts
Among people making managerial decisions and
those affected by them
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.
Tangible resources :
Intangible resources :
Capabilities
Capabilities 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
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.
Building Core Competencies

Four Criteria of Sustainable Competitive Advantage
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.
Basic Value Chain
A RESOURCE-BASED VIEW OF COMPETITIVE ADVANTAGE AT THE PORT OF

SINGAPORE
A. OPERATIONS AT THE PORT

Key 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) to
create plans for ship berthing and for unloading containers.
B. ENABLING THE PORT OPERATIONS
PSA has number of support features or enablers that make the Port operations highly
effective and help sustain its competitive edge:
Has large merchant fleet
Largest owner of warehouse space in Singapore
PSAs workforce 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 TECHNOLOGY
Such 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 simply
irrelevant 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 contributed
to 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. This is proof that they are able to manage the source
of intangible and tangible as well.

The combination of Singapores infrastructure, IT, operations and specialized Port
equipment also contributes to the Ports competitive position, Singapore succeeded in
create value as the strength in the competition..

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

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

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THE INTERNAL ORGANIZATION: RESOURCES, CAPABILITIES,

CORE COMPETENCIES, AND COMPETITIVE ADVANTAGES

NAME: Rd.Indra Adika P.

MASTER OF BUSINESS ADMINISTRATION

THE INTERNAL ORGANIZATION: RESOURCES, CAPABILITIES, CORE

Analyzing the Internal Organization

not dependent on the assumptions of a single country, culture, or context.

capabilities (Understand how to leverage these bundles)

Resources, Capabilities, and Core Competencies

Building Core Competencies

Value Chain Analysis

Basic Value Chain

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

A. OPERATIONS AT THE PORT

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

of intangible and tangible as well.

create value as the strength in the competition..

make it difficult for other Ports to replicate its facilities.

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