Core competencies

Core competencies

1. Core Competencies

2. What is Core Competencies?? A  core competency  is a concept in management theory and can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace". Core competencies fulfill three criteria: Provides potential access to a wide variety of markets. Should make a significant contribution to the perceived customer benefits of the end product. Difficult to imitate by competitors.

3. Facilitates strategy development Long term competitive advantage Outsourcing non-core activities Encourages innovation An attribute valued by market Need for Core Competencies

4. Examples APPLE - Rich design and user experience 3M- Competencies in substrates, coatings, and adhesives CANON- Differentiated itself from Xerox DOMINOS- Integrating multi-channel systems STARBUCKS- Localized customer experience

5. The Core Competence Model

6. The Core Competence Model comprises four core competences: 1. Resources -These are the sources for the development and acquisition of skills and technologies . 2. Capabilities -The various possibilities to build core competences . 3. Competitive advantage -The challenge to acquire and develop the largest possible market share of core products. 4. Strategy - The strategy to develop the largest possible market share of finished products.

7. ( as the image is self explanatory we will tell the people to explain each quadrant)

8. The Core Competence of the Corporation

9. Outline of the Article The article emphasizes the importance of core competence of a corporation and asks management to develop their organization based on core competence Rethinking the Corporation The Roots of Competitive Advantage How Not to Think of Competence Identifying Core Competencies – And Losing Them From Core Competencies to Core Products The Tyranny of the SBU Developing Strategic Architecture Redeploying to Exploit Competencies

10. Rethinking the Corporation “The critical task for management is to create an organization capable of infusing products with irresistible functionality or better, creating products that customers need but have not yet even imagined.”

11. GTE vs. NEC Example GTE NEC Industry Position 1980 Sales $9.98B, Net Cash Flow $1.73B Well positioned to become major player in information technology industry Active in telecommunications Sales $3.8 B Comparable technological base and computer business No experience in telecommunications Management Concepts No strategic intent or architecture Senior Managers continued to function as individual business units Strategic Focus to bridge gap between telecommunications and office automation Focused on - Semiconductors “C&C” – Computing and Communications Committee Business Moves Divested Sylvania TV and Telenet Joint Ventures for switching, transmission and digital PABX Closed down semiconductors Consolidated position in mainframe computers Moved beyond switching and transmission to include mobile phones, fax machines Industry Position 1988 Sales $16.46B Telephone operating company with position in defense and lighting Sales $21.89 B World leader in semiconductors and first-tier in telecommunications

12. Roots of Competitive Advantage “The diversified corporation is a large tree.... The root system that provides nourishment, sustenance, and stability is the core competence.” Companies using competencies experience rapid growth: Canon, Honda outpaced rivals Sony, Casio, Yamaha invented new devices Consolidating corporate-wide technologies and resources into competencies is the key to success

13. Diversified corporation as a large tree Trunk and Major Limbs = Core Products Leaves, Flowers and Fruit = End Products Root System = Core Competency provides nourishment, sustenance and stability

14. The Root of Competitiveness

15. Core Competence Core competence is…. the collective learning in the organization a bundle of skills integrated to make a company unique the organizational culture based on people, their skills and knowledge make a company competitive the engine for new business development created from the coordination, integration and harmonization of diverse skills and multiple streams of technologies communication, involvement, and working across organizational boundaries Unlike physical assets, competencies do not deteriorate as they are applied and shared. They grow.

16. How Not to Think of Competence Companies consider themselves as bundles of product making businesses (remember Marketing Myopia!) and is focused on price/performance attributes of current products Building core competencies is different from integrating vertically….have no detailed plan on what, where, how to build an organization Cultivating core competence does not mean outspending rivals on R&D or getting businesses to become more vertically integrated

17. Identifying Core Competencies–And L osing Them At least three tests can be applied to identify core competencies in a company. They are: core competencies provide potential access to a variety of markets make a significant contribution to perceived customer benefits of the end product should be difficult for competitors to imitate Core competency can be lost… through outsourcing (Honda vs. Chrysler) by giving up opportunities to establish competencies of existing businesses (color television perceived as a mature product)