Name : Shabrina Wulan Nursita

Student No. : 1706089186

Subject : International Strategic Managemet
Assignment : Summary of Reading – Looking Inside for Competitive Advantage (Barney, 1995)

The porter five forces tells about the environmental analysis which according to the study is only half of the
way in explaining how a company can get a competitive advantage. Swot modell explains that company
needs to explore internal strength and be aware of the internal weakness. In other words, company need to
be able to evaluate its resource and capabilities (Finansial, Physical, human, organization assets) and anwer
several questions such as value, rareness, imitability, and organization in looking for competitive advantage.
 Do The Firm Add Value
Strategic managers main and most important responsibilities is to evaluate whether the firm resources
continue to add value, despite the change in the competitive environment. Other issue is how can the
firm use its traditional strength in new way to exploit opportunities and neutralized threats. In other
words the company should think how to use some of the historical important capabilities to try to
position itself. Building on its traditional strength in new ways. However, the notes that should be taken
is firm resources can not be categorized as valuable when seen in a vacuum, but only when they can
exploit opportunities and neutralized threath. In this case, using porter five forces is helpful in
identiying and isolate the potential opportunities and threats.
 The Question of Rareness
In this issue, the firm needs to ask whether its resources and capabilities is controlled by numerous
competing firm. If the answer is yes, then the source of competitive advantage is valuable but
common. In finding the competitive advantage, firms need to know how many competing firms already
possess these valuable features & capabilities. The most important thing, firms need to find something
different to exploit. It needs to find something valuable and rare.
 The Question of Imitability
The issue needed to adress is do firms without resources or capabilities face a cost disadvantage in
obtaining them compare to firms that already possess it? This issue is very important to have a
sustainable competitive advantage. Imitation can be in a form of duplication or substitution. Why some
internal attributes maybe costly to immitate
 Important of history
 Numerous small decisions in developing, nurturing, and exploiting resources
 Importance of socially complex resources
The point is when a firms resources and capabilities are valuable, rare, and socially complex, those
resources are likely tobe resource of sustained competitive advantage.
 The Question of Organization
The most important issue to adress in this question is whether the organization is capable to exploit
the full competitive potential of its resources and capabilities. Numerous component considered are
its
 Formal reporting structure
  Explicit management control systems
 Compensation policy
Organization is actually a complimentary resources that has limited ability to generate competitive
advantage in isolation. Therefore, combination with other resources and capabilities can enable a firm
to realize its full competitive advantage.

Example in Cola Wars

Both Coca-Cola and Pepsi are beginning to recognize the futility of going head to head against an
equally skilled competitor in a battle for market share to gain competitive advantages. Instead, these
firms seem to be altering both their market share and other strategies. Coke and Pepsi seem to be
moving away from head-to-head competition
for market share, and moving towards exploiting different resources.
Example in Machintosh
At first there are two mindsets-IBM's "computers are complex tools run by technical specialists" versus
Apple's "computers are toys for everyone". Such mindsets are socially complex, slow to change, and
difficult to imitate.. With the introduction of Windows by Microsoft, the rareness of Macintosh's user
friendliness has been reduced, as has been the competitive advantage that Macintosh had generated.
Interestingly, just as Windows software was introduced, Apple began to radically change its pricing
and product development strategies. First Apple cut the price of the Macintosh computer, reflecting
the fact that user friendliness was not as rare after Windows as it was before Windows. Second, Apple
seems to have recognized the need to develop new resources and capabilities to enhance their
traditional user-friendly strengths. Rather than only competing with other hardware and software
companies, Apple has begun developing strategic alliances with several other computer firms,
including IBM and Microsoft. These alliances may help Apple develop the resources and capabilities
they need to remain competitive in the personal computer industry over the next several years.

Conclussion:
Sustained competitive advantage cannot be created simply by evaluating environmental opportunities
and threats, and then conducting business only in high-opportunity, low-threat environments. Rather,
creating sustained competitive advantage depends on the unique resources and capabilities that a
firm brings to competition in its environment. To discover these resources and capabilities, managers
must look inside their firm for valuable, rare and costly-to-imitate resources, and then exploit these
resources through their organization.