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The Core competence of the corporation

The Core competence of the corporation. Ilene Deleon Linh Nguyen Uyen Pham Group #5 MKTG 5320. Core competence. Competitive advantage.

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The Core competence of the corporation

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  1. The Core competence of the corporation Ilene Deleon Linh Nguyen Uyen Pham Group #5 MKTG 5320

  2. Core competence

  3. Competitive advantage “ The real sources of advantage are to be found in management’s ability to consolidate corporate wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities.”

  4. Core competence is not.. • like a physical asset, it does not diminish • outspending rivals on R&D • shared costs • integrating vertically

  5. Tests to identify core competence • Does it provide potential access to a wide variety of markets? • Does it make a significant contribution to the perceived customer benefits of the end product? • Is it difficult for a competitor to imitate?

  6. Viro Test – is a resource or capability Costly to Imitate? Competitive Implications Valuable? Rare? Exploited? Competitive Disadvantage No -- -- -- Competitive Parity Yes No -- -- Temporary Competitive Advantage Yes No Yes -- Sustained Competitive Advantage Yes Yes Yes Yes

  7. Companies successfully using core competencies

  8. Companies that have failed to successfully use core competencies

  9. How many core competencies are required for the firm to have a sustained competitive advantage?

  10. How many core competencies are required for the firm to have a sustained competitive advantage? • No more than 5 core competencies • Supporting and nurturing more than five core competencies may prevent a firm from developing the focus it needs to fully exploit its competencies in the marketplace.

  11. Recent researches on Core Competencies • may lead to false security by ignoring: • disruptive innovations • emerging technologies • rising capabilities of competitors • customers may change their taste • Ex: typewriters, scooters in early nineties

  12. Competence breadth and depth by Edgar and Lockwood (2012) • Competence breadth enables a firm to provide a range of products and services. • Competence depth enables the firm to provide each of them better and more systematically

  13. Another method to identify core competence by Boguslauskas and Kvedaraviciene (2009)

  14. The Tyranny of the SBU • Compare two concepts of the corporation

  15. The Tyranny of the SBU

  16. The Tyranny of the SBU

  17. The ineffectiveness of SBU model: • Underinvestment in Developing Core Competencies and Core Products • Imprisoned Resources • Bounded Innovation Thus: A shift in management is inevitable.

  18. Strategic Architecture • A road map of the future that identifies which core competencies to build and their constituent technologies. • Establish objectives for competence building. • Consistency of resource allocation, administrative infrastructure

  19. Benefits of Strategic Architecture • Reduce the investment needed to secure future market leadership • Provide a logic for product and market diversification

  20. Developing Strategic Architecture • Create a managerial culture, team work, a capacity to change, and a willingness to share resources, to protect proprietary skills, and to think long term.

  21. Individual core competence Culture

  22. Human Resources “The benefits of competencies, like the benefits of the money supply, depend on the velocity of their circulation as well as on the size of the stock the company holds.”

  23. The Exploration of Human Resources (2011) • College academic training in a particular program can enhance the students labor force to a human resource • Increase employment • Better contribution to firms FOUR ATTRIBUTES: • Humanity Care (respect for others, values) • Innovation Integration (logical, organized) • Interpersonal Communication (analyze problems, communication) • Teamwork (good relationships, organized, relate to common goals)

  24. Questions?

  25. Reference • Boguslauskas V, Kvedaraviciene G. Difficulties in identifying Company's Core Competencies and Core Processes. Engineering Economics [serial online]. April 2009;62(2):75-81. Available from: Business Source Complete, Ipswich, MA. • Edgar W, Lockwood C. UNDERSTANDING, FINDING, AND CONCEPTUALIZING CORE COMPETENCE DEPTH: A FRAMEWORK, GUIDE, AND GENERALIZATION FOR CORPORATE MANAGERS AND RESEARCH PROFESSIONALS. Academy Of Strategic Management Journal [serial online]. June 2012;11(2):63-92. Available from: Business Source Complete, Ipswich, MA. • http://www.uvic.ca/coopandcareer/studentsalumni/resources/competencykit/core.php#section0-0 • Chen, C., Chao, C., Yang, Y., & Lee, Y. (2011). The exploration of human resource from the supply-demand core competence to its suitability: A resource-based theory perspective. Journal of International Management Studies, 6(1), 1-12. Retrieved from http://search.proquest.com/docview/867910271?accountid=7084 • Hitt, M., Ireland, D., Hoskisson, R., (2011). Strategic management competitiveness and globalization: concepts, ninth edition. Mason, OH: South-Western Cengage Learning

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