Lesson 21: Core Competency and Competitive Advantage

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Watch this with a 10-15 minute audiotrack at http://vimeo.com/novusprogram/lesson21

The goal of this lesson is to provide participants with the tools to identify how to utilize core assets or strengths within their company. Participants should have a clear understanding of the importance of distinguishing in which things they excel and structuring their strategy around these areas. Using these identified strengths, participants will be provided two frequently used strategies to gain a competitive advantage within their market.

The Novus project is a combination of video tutorials designed to be used in conjunction with a free business simulation software program. The Novus Business and IT Program contains 36 business and IT training videos, covering basic finance, accounting, marketing, economics, business strategy, Word, Excel, and PowerPoint. Users will have an opportunity to apply the lessons in the Novus Business Simulator. Over six rounds, the user or teams will have to make decisions on capital purchases, financing, production, financing, and human resources for a microbrewery. This channel has arranged the 36 video lessons into the order in which they are meant to be used with the simulator. To watch this slideshow as a video, please go to our Vimeo page at: https://vimeo.com/novusprogram. To download our free business simulation software, please go to our SourceForge page at: http://sourceforge.net/projects/novus/.

Published in: Education, Business

Lesson 21: Core Competency and Competitive Advantage

  1. 1. Core Competencies & Competitive Advantage Objective: To tools to identify how to utilize core assets or strengths within a company. Participants should have a clear understanding of the importance of distinguishing in which things they excel and structuring their strategy around these areas.Novus Business and IT Training Program
  2. 2. Lesson Overview• Always competitors!• Purpose: – Identify top strengths/assets (COMPETENCIES) – Use competencies as building blocks – Develop strategies to be a stable, long-term leader in your marketNovus Business and IT Training Program 1
  3. 3. What are Core Competencies?• Assets that set your company apart• Subset of strengths from SWOT analysis• Meet the following conditions: – It provides benefits to the customer – It is hard to imitate – It provides access to a wide variety of markets• “The roots of your tree.”Novus Business and IT Training Program 2
  4. 4. Identifying Your Core Competencies• Techniques: – Compile a list of company assets (both tangible/intangible) – Identify which of your products have succeeded in the past – Consider what positive reviews you’ve received from your customers• Be realistic• Align with long-term goalsNovus Business and IT Training Program 3
  5. 5. The Core Competency Difference• Identify your competencies• Develop your competencies• Structure your organization around your competencies• Involve core competencies in all end productsNovus Business and IT Training Program 4
  6. 6. Competitive Advantage• Competitive advantage is having greater profits than the average for the industry – Superior assets – Superb capabilities – Key success factors• No core competencies = below average performance = no competitive advantageNovus Business and IT Training Program 5
  7. 7. Strategies of Competitive AdvantageCost Leadership Differentiation• Similar product at a lower • Unique product at a higher price price Understand both strategies and aim to achieve one Novus Business and IT Training Program 6
  8. 8. Cost Leadership• Do not disregard differentiation• Product must be comparable• Not good if many competitors are trying to become “the cost leader”Novus Business and IT Training Program 7
  9. 9. Differentiation• Unique in some way greatly VALUED by customer – A better product – A quicker delivery system – A stronger marketing approach – Better customer service – Longer product warrantiesNovus Business and IT Training Program 8
  10. 10. ReviewCore Competencies Competitive Advantage• Provide benefit to the • Lowest cost provider customer • Better/more unique product• Be hard to imitate• Supply access to a wide variety of market Core competencies + competitive advantage = long-term successNovus Business and IT Training Program 9
  11. 11. ActivityIn your groups with the company provided to by your instructor (café, clothing department, restaurant, or bar) answer the questions below. Please create/imagine any missing information and indicate it in your answers.• What are your assets? Please list 5-7.• Select 2 of your top assets. What are ways to develop or improve these assets?• Determine whether any of these assets can be a core competency using the criteria below. Explain why or why not. – Does it provide benefits to the customer? – Is it hard to imitate? – Does it offer access to a wide variety of markets?• Which one of the two strategies discussed to achieve a competitive advantage does your company have the potential to achieve? Why? How would you go about achieving this?Novus Business and IT Training Program 10

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