The Context of Internal Analysis

In the global economy, traditional factors such as labor costs, access to financial
resources and raw materials, and protected or regulated markets remain sources of
competitive advantage, but to a lesser degree. One important reason is that
competitors can apply their resources to successfully use an international strategy as
a means of overcoming the advantages created by these more traditional sources.
Increasingly, those who analyze their firms internal organization should use a global
mind-set to do so. A global mindset is the ability to analyze, understand and manage
an internal organization in ways that are not dependent on the assumptions of a single
country, culture, or context.

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. Customers of Luby Cafeterias, for example, pay for meals that are
value-priced, generally healthy, and served quickly in a casual setting.


Components of Internal Analysis Leading to Competitive Advantage and Strategy
Competitiveness

Resources, capabilities and core competencies are the foundation of competitive
advantage. Resources are bundled to create organizational capabilities. In turn,
capabilities are the sources of a firms core competencies, which are the basis of
competitive advantages.

A. Resources, Capabilities and Core Competencies

1. Resources
Skills of employee are a firms assets, including people and the value of its
brand name

Type of resources :
Intangible are assets that can be observed and quantified ( financial
resources, organizational resources, physical resources, technology
resources)
Tangible include assets that are rooted deeply in the firms history,
accumulate over time, and are relative difficult for competitors to analyze
and imitate (human resources, innovation resources, reputational resources)

2. Capabilities
Represent the capacity to deploy resources that have been purposely
integrated to achieve a desired end state
Emerge over time through complex interactions among tangible and
intangible resources
Four criteria for determining strategic capabilities :
1. Value
2. Rarity
3. Costly-to-imitate
4. Non substitutability

3. Core Competencies
Activities that a firm performs especially well compared to competitors
Activities through which the firm adds unique value to its goods or services
over a long period of time

B. Building Sustainable Competitive Advantage

1. Valuable
Allow the firm to exploit opportunities or neutralize threats in its external
environment.
2. Rare capabilit
Are capabilities that few, if any competitors possess.
3. Costly-to-Imitate Capabilities
Capabilities are capabilities that other firms cannot easily develop.
4. Non substitutable Capabilities
Are capabilities that do not have strategic equivalents.

C. Value Chain Analysis
1. Value Chain
Primary activities are involved with a products physical creation, its sale
and distribution to buyers and its service after the sale.
Support activities provide the assistance necessary for the primary activities
to take place.

The Basic Value Chain

D. Outsourcing
Outsourching is the purchase of a value creating activity from an external
supplier. Outsourcing can be effective because few, if any, organizations possess the
resources and capabilities required to achieve competitive superiority in all primary
and support activities. Firms must outsource only activities where they cannot create
value or where they are at a substantial disadvantage compared to competitors.

E. Competencies, Strength, Weaknesses, and Strategic Decisions
At the conclusion of the internal analysis, firms must identify their strengths
and weaknesses in resources, capabilities, and core competencies. For example, if the
company have weak capabilities or do not have core competencies in areas required to
achieve a competitive advantage, they must acquire those resources and build
capabilities and competencies needed. Alternatively, they could decide to outsource a
function or activity where they are weak in order to improve value for customer.





















A RESOURCES BASED VIEW OF COMPETITIVE ADVANTAGE AT THE
PORT OF SINGAPORE.

This case was made to discuss about the resources, including operations and
information technology that have contributed to the competitive postion of the port of
Singapore. Its location on major trade routes and the skills of its well educated work
force. The ship between Europe and southeast asia and the US west coast and
southeast asia must pass Singapore.

The combination of resources at Singapore port including supportive government
policies, ample investmen, and well thought out operations and information
technology along with location and natural deep harbor to help create a sustainable
advantage for the port. And there also a natural disadvantages like small land area by
successfully applying information technology in critical areas to increase the islands
capacity to handle shipping.

There are two natural and three additional manmade resources which have contributed
to the success of the port and PSA corporation :
A. Initial resources
Singapore location
The natural harbor (deep harbor)

B. Additional resources
Capital for infrastructure foreign investment.
IT management skills
IT and operations capabilities for a port
The combination of Singapore infrastructure, IT, operations and specialized port
equipment also contributed to the port competitive position. The efficiency of the port
is enhanced by IT and operational system. iT management skills and port operations
and information technology combine to make it difficult for other ports to replicate its
facilities.
But PSA competitors response this very well, in 2002 singapore lost Maersk
Sealand and Evergreen Marine to the port Tanjung Pelepas in johor Bahru, Malaysia.
PSA also response by dropped the handling rate for empty containers by 50% and
considering giving operators a stake in PSA operations.
Singapore consciously developed all of its resources. The country has a clear
industrial policy and it encouraged the development of specific industries and built a
transportation infrastructure to support trade. In the conclusion, the port of Singapore
developed a series of manmade resources to supplement and enhance its natural
resources of a protected port and location. This kind group of dynamic resources can
help sustain an organizations competitive advantage.