Introduction

In the portfolio activity Unit 4 assignment, this time I will discuss a local company that has

gone global so that it is easier to understand the business and the products it produces. That

company is a Unilever Indonesia company. Unilever Indonesia is a multinational corporation that

was founded in Indonesia 88 years ago and manufactures FMCG (fast-moving consumer goods)

in more than 190 countries. Regarding goods with well-known brands that have gained popularity

on a global scale, such as Pepsodent, Lux, Lifebuoy, Dove, Sunsilk, Clear, Rexona, Vaseline,

Rinso, Molto, Sunlight, Wall's, Bango, and several more items (Unilever PLC, 2023),

According to Murphy (2023), tangible assets are the main types of assets in the form of

physical goods owned and recognized by companies, such as buildings, land, or computer

equipment used by companies to produce their products or services, goodwill, etc. While

intangible assets do not exist physically but have a monetary value because they represent potential

income (Murphy, 2023). A type of intangible asset is the copyright to a song or a patent; for

example, a record company that owns the copyright will get royalties every time the song is played.

Unilever Indonesia has tangible resources in the form of fixed assets like buildings,

machinery, equipment, and motor vehicles. Meanwhile, Unilever Indonesia's intangible assets are

goodwill, software and software licenses that have finite useful lives and are measured at cost less

accumulated amortization. Amortization is calculated using the straight-line method to allocate

their cost over their estimated useful lives. Trademarks acquired through a business merger are

recorded at fair value on the day of acquisition. The Company determines whether the useful lives

of trademarks are finite or indefinite based on relevant considerations (PT Unilever Indonesia tbk.,

n.d.). Each reporting period, the useful lives of trademarks are examined to see if the current
situation still justifies estimating an indefinite useful life. Goodwill here represents the excess of

the cost of an acquisition over the fair value of the net identifiable assets of the acquired business

at the date of acquisition. Goodwill is tested periodically for impairment and is carried at a lower

cost than accumulated impairment losses. Impairment losses on goodwill are not reversed. The

carrying value of goodwill associated with the sold business is included in the gain or loss on the

disposition of an entity.

From the resources described above, which are resources that can be built, are tangible

resources such as fixed assets such as land and factory buildings, which are used as a place to carry

out the company's daily activities, such as production, or as a warehouse to store inventory if the

building is not sufficient, the capacity of the building will be increased by means of construction

or renovation to be greater, according to the Team (n.d.), while the resources that can be maintained

are intangible resources, which, according to the Swedish Agency for Economic and Regional

Growth (n.d.), must be maintained with the following considerations:

- The company will get protection for its own investments

- It can block competitors

- Attracting investors' attention is simpler.

- The license it holds can be traded.

Heterogeneous resources are the uniqueness of a company in terms of the resources that

make it different (Sridharan, 2023). Others may not even own the resources in the area, instead

concentrating on different activities or outsourcing the area. In this case, Unilever is taking

advantage of the moment by utilizing suppliers and diversifying the products it produces. On the

one hand, Unilever is supported by suppliers who are loyal and have long-standing business
relationships, and the products they produce are unique, making customers reluctant to switch to

competitors' products (PT Unilever Indonesia tbk., n.d.). In this case, it can be said that the

company has different resources, whichs is the key to the enterprise resource-based view (RBV).

VRIO is a strategic analysis tool focused on enterprise resources (Fern Fort University,

n.d.). To build a sustainable competitive advantage, Unilever's resources must be valuable, rare,

and difficult to imitate. Second, Unilever needs to have the capability, organizational structure,

and culture to optimize the use of available resources. VRIO analysis can help organizations like

Unilever better allocate resources and build sustainable value and supply chains. The following is

a detailed discussion related to VRIO analysis for Unilever Indonesia companies, namely:

1. A valuable resource for Unilever

Resources or capabilities are considered valuable for Unilever Indonesia if they allow

Unilever to exploit opportunities or eliminate threats that arise from both the micro-business

environment and the macro-business environment. If resources do not enable Unilever to minimize

threats or exploit opportunities, then these resources will not make a significant contribution to

building a sustainable competitive advantage for Unilever.

2. Rare Resources for Unilever Indonesia

In the industries where Unilever operates, valuable resources are held by a number of

competitors. So a valuable resource by itself does not provide a sustainable competitive advantage.

Unilever needs scarce resources to compete in the industry. If Unilever did not have the scarce

resources needed to be successful in the industry, it would not be able to compete successfully in
the marketplace. Second, holding scarce resources can give Unilever a competitive advantage

against players who do not have these resources.

3. Resources that are difficult to imitate

Valuable and rare resources can give Unilever a competitive advantage for a period of time,

as all competitors will try to imitate or replicate those resources. A sustainable competitive

advantage arises when a resource is difficult for competitors to imitate. Unilever can create traction

by innovating on the product side, reducing pain points in service delivery, and having an effective

after-sales service strategy.

4. It must be well organized

Even if Unilever had all the valuable resources that are scarce and hard to imitate, that

would not automatically generate a sustainable competitive advantage. Having the organizational

capacities, knowledge, and processes to utilize resources is essential for creating a lasting

competitive advantage. Unilever won't be able to fully utilize its resources if it is not structured

according to its strengths. There is an example of a VRIO analysis application for Unilever

Indonesia if it is implemented in the form of a table view, as below:

Competitive
Resources Value Rare Imitation Organization Advantage

Possibilities Yes, No, most Yes, it is Brand Temporary

for Unilever there are of the possible for extensions will Competitive
product new rivals are competitors necessitate Benefit
brand market also to imitate it. more money
extensions niches focusing for marketing.
forming on those
niches.
 Competitive
Resources Value Rare Imitation Organization Advantage

Unilever's Yes No Yes, There is still a Can provide

sales team Competitors ton of room to sustainable
and channel may copy make use of competitive
management this. the excellent advantage.
sales force.

Conclusion

In the business world, there is always competition, which is a fundamental aspect of a

business. Resources are the forces that drive a company through existing competition. Therefore,

utilizing resources optimally is the key to being able to survive in the world of business competition

and maintain a competitive advantage. Resource-based views ensure optimal resource and

organizational performance, and of course, resources-based value theory can be useful for

developing competitive advantage, especially in the short term. What is important to note,

however, is that companies should use this model in partnership with other frameworks and

theories when carrying out long-term strategic planning.

References

Murphy, C. B. (2023, June 13). Tangible assets vs. intangible assets: What’s the

difference? Investopedia. https://www.investopedia.com/ask/answers/012815/what-

difference-between-tangible-and-intangible-assets.asp

Protect your intangible assets. Swedish Agency for Economic and Regional Growth. (n.d.).

https://www.verksamt.se/web/international/starting/protect-your-intangible-
 assets#:~:text=You%20get%20protection%20for%20your,and%20licence%20your%20int

angible%20assets

PT Unilever Indonesia tbk. (n.d.). https://www.unilever.co.id/files/8c3f57fc-e416-4f9e-9fb9-

eeca94fd8550/unvr-q4-2022-final-v2.pdf

Sridharan, M. A. (2023, April 21). RBV - what is a resource-based view of strategy?. Think

Insights. https://thinkinsights.net/strategy/rbv-strategy/#immobile

Team, I. E. (n.d.). The difference between tangible vs. intangible assets - indeed.

https://uk.indeed.com/career-advice/career-development/tangible-vs-intangible

Unilever PLC. (2023, February 13). Perusahaan Kami. Unilever. https://www.unilever.co.id/our-

company/

Unilever VRIO / Vrin Analysis: Assignment help. Fern Fort University. (n.d.).

http://fernfortuniversity.com/term-papers/vrio/c/1284-unilever.php