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Core competencies case study
Core competencies case study
Core competency and competitive advantage
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*--Explain the concept of core rigidity. Do long lived organizations inevitably have difficulties avoiding the problem? Use examples from automobile industry --*
Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals (Hanson, 2008). Those capabilities must include usage of services or resources being valuable, rare, non-substitutable and costly to imitate. Using the capabilities strategically will make a core competency, which brings the significance or a valuable asset also referred as core competency for a firm.
Depending on the industry, competitor environment, general environment such as demographic, socio cultural, economic, political/legal would vary. Any firms that find their signature activity would make the strong stand in the market for its firm. This combination and harmonization of multiple abilities make competencies difficult to imitate.
Once the company establishes the core competencies that can be well differentiated over other firms, and uses them well they are likely to enjoy profit and eventually finding themselves in significant market place. Possible examples of core competencies are Wal-mart in inventory management, Honda in dealer management and product realization and Dell’s distribution system.
Unfortunately many core competencies do not seem to last forever. As time elapse, core competencies become vulnerable to the changes in general, industry environment. Firms that do not acknowledge or indifferent to the changes, or refuse to change, in their myopia are likely to suffer financially or from any other areas in the near or not-so-long future.
Core rigidity can be explained as “flip side, the dark side of core capabilities is revealed due to external events when new competitors figure out a better way to serve the firm’s customers, when new technologies emerge or when political or social events shift the ground underneath” (Leonard-Barton, N.D).
To be able to overcome capability turning into core rigidity, management need to be seek for innovative ways. But it is sometimes not an easy thing to do to realize the activity a firm is doing, believing it is a core competency to be core rigidity. It is not like core competency becoming core rigidity is apparent or obvious- It is not black and white thing of suddenly all at once. Also not easy thing to foresee future trends or tendencies, and is not guaranteed that the prediction will be correct- would be just estimates only.
As per Leslie Wexner, CEO of Limited brands say “Success begets failure because the more that you know a thing works, the less likely you are to think that it won’t work.
There are number of strengths that we posses that will help us to capitalise on a competitive market, these strengths include:
Strengths Quality name brand products at low prices. This is the cornerstone of the Costco business model and one of the biggest drivers of its success. Costco has built an identity based on this strength. Fast inventory turnover and High sales volume This is a key strength that directly relates back to the first strength. Fast turnover means they are collecting on their purchases often before payment is due, cutting borrowing costs and further reducing prices.
Prahalad, C. & Hamel, G. (1990). The Core Competence of the Corporation. Harvard business Review [Online Edition] Retrieved from https://faculty.fuqua.duke.edu/~charlesw/s591/willstuff/oldstuff/PhD_2007-2008/Papers/C08/Prahalad_Hamel_1990.pdf
What core competencies do you think the company has and what is needed to exploit opportunity and counter threats.
...ur customers and employees happy, profits and growth will follow. In addition, Enterprise should always be aware of the tough competition that is out there and fight against it with innovative ideas and outstanding customer service. As Andy Taylor said, “We own the high ground in this business, and we aren’t going to give it up.”
For instance, Harley Davidson may be forced to change their marketing strategy due to the entrance of a new competitor into the market. Second, Harley Davidson has to learn new skills and technologies quickly. For example, technologies are changing rapidly, so it is crucial for Harley Davidson’s business plan to change or alter in order to keep up with innovation. Third, this organization has to effectively leverage its core competencies while competing with its competitors. This is, Flexibility is required for Harley Davidson to learn how to use primary value-chain activities and support functions in the way that allow the organization to produce their products at a lower cost with differentiated features compare to their competitors in the market
Firstly, there is a need to focus on the company competitive dimensions before embarking on the decisions. In this aspect, the Competitive capabilities are the Cost, Quality, Time, and Flexibility dimensions that a process or value chain actually processes and is able to...
No company that falls behind the competition is guilty of standing completely still. But sometimes our efforts fail because of the level of commitment to change.
Faced with changing markets and higher competition, more and more firms are struggling to reestablish their dominance, keep market share, and in some cases, ensure their survival. Many have come to understand that the key to competitive success is to transform the way they function. They are reducing reliance on managerial authority, formal rules and procedures, and narrow divisions of work. In effect, companies are moving from the hierarchical and bureaucratic model of organization that has defined corporations since World War II to what can be called the task-driven organization where what has to be done governs who works with whom and who leads. But while senior managers understand the necessity of change to cope with new competitive realities, they often misunderstand what it takes to bring it about.
of a firm to attain new forms of competitive advantage (Müller, 2011). It is due to these
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
In conclusion, Built to Last gives many examples of companies that have focused more on building an organization rather than making a profit. Many of the most successful companies have gotten to that point through a passionate commitment to a core ideology. They continually look to preserve that core, while creatively seeking ways to improve and stimulate progress. These are the timeless management principles that have worked for visionary companies of the past, present, and future. According to Collins and Porras, "one of the most important steps you can take in building a visionary company is not an action, but a shift in perspective" (Collins & Porras, 2002). To be built to last, you have to be built to change.
We can define competitive advantage as simply what a given company excels best at. This could be the distinguishing factor as to why consumers purchase from your company and not the competition. This could also be understood from the perspective of quality that a business can create for the consumer.
In fact, it is in those individuals where there is the possibility of accumulating knowledge, jumping on innovation and mobilizing the will of the people in an organization. Clearly, the leader in charge of this transformation or revitalization plays a major role. With very few exceptions, it appears that the efforts of the executives are faced with a very large resistance change of the members of the organization. This is so given because the changes that people are looking at more radical and take place more discomfort than any change in strategy or process.
... and incentives to implement strategy. The importance of structure persists even in the face of the growth of the internet, globalization, and changing demographics of the workforce.