Transcript of "Core Competence and Competitive Advantage"
DIAGNOSING AND BUILDINGCOMPETITIVE ADVANTAGE(CA) AND CORE COMPETENCE(CC) 1 K.CHITRA
HOW DO FIRMS BUILT CA? Firm utilize strategy for building CA. -survival and growth of the company CA at Corporate Level as well as Business Level. -one unified support system Strategy uses as well as creates CA. - cumulative strategic actions. 2
TOOLS FOR IDENTIFYING CATwo useful tool for identifying and building CA Benchmarking Value Chain AnalysisBENCHMARKING “The process of comparing the company’s products and processes to those of competitors or leading firms in other industries to find ways to improve quality and performance” 3
TRAITS OF BENCHMARKING Larger scope than inter-firm comparison. Model for emulation Identifies and quantifies the performance gap. 3 components for relative performance Products and services Business processes and procedures. People 5
Value creation and market-orientation Capability of smarter product launch Efficient distribution channel CRM Effective management of marketing information Ability to price optimally. 6
VALUE CHAIN ANALYSIS Vastmatrix of value creating activities superior than the competitor. Better grasp of strength and weaknesses of the competitor. In-depth comparison of value chain enhances firm to identify and built competitive advantage. Eg - EASTMAN KODAK 8
CA THROUGH INNOVATIONSGodrej Nano Chotukool PROJECT SHAKTHI 18
CA THROUGH INTEGRATION Uptron Colour Picture Tubes Unit 19
CA-A CONSCIOUS AND CONTINUING ENDEAVOUR Competitive Advantage gets eroded with time. Building durable CA requires Unique Competence . Eg -Dell’s CA in Distribution 20
CORE COMPETENCE “It is a fundamental, unique and inimitable strength of the firm.” Provides the firm, the access to a variety of products/markets. Contributes to customer benefits in the products. Cannot be easily imitated easily by competitors. Competence at the root technology gaining lasting advantage and fresh value enhancement. 21
CRITICAL COMMENTS ON CC Restricts the number of business the firm can be in -3M CORE CONCEPT-Sticky Tape Diversificationmakes a dent in the firm’s CC -Tatas and HUL- Lakme and Tomco (Cosmetics) 23
DISTINCTION BETWEEN CA AND CC Competitive Advantage Core Competence1. Does not necessary imply CC. Imply a number of CA.2. Not a Sure success formula on a Sure success formula on a long run. long run.3. Provides Temporary Competitive Provides Lasting Competitive Superiority. Superiority.4. Grows from a functional strength. Grows from the roots of Businesses and products.5. CA in a given business or product. CC excels in a variety of businesses /products.6. Can be easily imitated and Inimitable preserve of the firm and competitors catch up fast. difficult to catch up. 247. Not unique to the firm on the long Unique and fundamental to a firm. run.