Strategy, Investment and New Services Development Path in Retail Industry by using Dynamic Capabilities in the Aspects of Path Dependency and Real Options: The Case of KOCTAS
Strategy, Investment and New Services Development Path in
Retail Industry by using Dynamic Capabilities in the Aspects of
Path Dependency and Real Options: The Case of KOCTAS
Istanbul Technical University, Faculty of Management, Department of Industrial
Maçka, 34367, Istanbul, Turkey
In this paper first of all detailed literature review has been done. For this purpose
first of all capability and core competencies are defined by other writers. Then
dynamic capabilities and path dependency concept are defined relation between
these concepts are stated. Then real options are defined and relation between
dynamic capability-real options and real options-path dependency are stated. Then
new definition about these concept and terminologies are defined. After that a new
framework is proposed to define relationship between core competencies,
capabilities, dynamic capabilities, path dependency, and real options. Finally, to
better understand framework, a case study is examined in the leader home
improvement retailing company called KOCTAS. Findings, results and further
implications for researcher and manager are stated.
Key words: Strategy Development, Investment Development, New Service
Development, Dynamic Capabilities, Path Dependency, Real Options, Retail, Home
The main of this paper is stated relationship between core competencies,
capabilities, dynamic capabilities, path dependency, and real options. For this
purpose detailed literature review is stated. Then a new framework is designed. This
new framework is examined in case study of KOCTAS. Finally, results and further
implications for researcher and manager are stated.
2. Literature Review
Literature review is continued by basic definitions and terminologies.
Core Competencies and Capabilities
A core competency is a specific factor that a business sees as being central to the
way it, or its employees, works. It fulfills three key criteria:
1. It is not easy for competitors to imitate.
2. It can be leveraged widely to many products and markets.
3. It must contribute to the end consumer's experienced benefits .
Firms are constantly seeking to create new combinations of the product, process,
organization and technology, and rivals are continuously attempting to improve their
competencies or to imitate the competencies of their most qualified competitors'
The concept of ‘core competence’ is a powerful one for businesses’ strategic
development and competitive advantages. It drives restructurings, divestitures,
mergers and strategic partnerships to produce new levels of profitability and
shareholder value .
The competencies of the company were developed through the process of
acquiring and deploying resources in a dynamic way to seek for entrepreneurial rents
By understanding the effect of core competencies and capabilities, dynamic
capabilities must examine carefully.
A dynamic capability is the firm’s potential to systematically solve problems,
formed by its propensity to sense opportunities and threats, to make timely and
market-oriented decisions, and to change its resource base . This is the most
recent and complete definition, integrating most of the past scattered research on
the topic. To explaining more deeply and to understanding the other meaning of this
concept, what the others saying about dynamic capability is carefully examined.
According to Eisenhardt and Martin, 2000, the firm’s ‘processes to integrate,
reconfigure, gain and release resources—to match and even create market change.’
manipulate resources may be very hard to replicate .
Also Teece et al., 1997, states that, this allows the firm to generate rent by
achieving new forms of competitive advantage .
By adding Milgrom and Roberts, rent, in turn, is a return received ‘in excess of
the minimum needed to attract resources’ .
Dynamic capabilities have another important theoretical implication, reinforcing
the recognition that firm-specific methods of coordinating resources may result in the
heterogeneous behavior of firms in the same industry .
How firms strategically respond to institutional changes is a function of the
resource sets possessed by firms and their capacities to “purposefully create, extend,
or modify their resource bases”. These capacities for changing resource bases of
firms are labeled as dynamic capabilities .
According to the dynamic capability view of the ﬁrm, the company consists of
human, physical and ﬁnancial resources and its knowledge base, which, in turn,
consists of already existing and routinely exploited, i.e. static and not yet fully
developed or exploited dynamic capabilities, which both can be produced either
internally by the ﬁrm itself or externally through the open market or networks .
David J. Teece, 2007, defines a framework that explains foundations of
dynamic capabilities and business performance in Figure-1.
Figure-1. Foundations of dynamic capabilities and business performance 
On the other hand, Violina and others, 2001, state a model which defines
relationship between continuous improvement and competitive advantage by
using dynamic capability and strategic flexibility in Figure-2.
Figure-2. Dynamic Capability and Competitive Advantage Model 
2.2.1. Core Competencies / Capabilities and Dynamic Capabilities
Relation between core competencies/capabilities and dynamic capabilities
states by Teece et al., 1997, as, dynamic capabilities consist of ‘‘the ﬁrm’s ability to
integrate, build and reconﬁgure internal and external competencies/capabilities to
address rapidly changing environments .
On the another hand, Blomqvist and Kylaheiko, 2000, define a framework
which defines relationship between resources, capabilities, core capabilities, dynamic
capabilities and other factors see an Figure-3.
Figure-3. DCV (dynamic capability view) of the ﬁrm 
Sydow and other (2009) define path dependency in 3 states as shown in Figure4. Phase I called as Preformation Phase can be characterized as an open situation
with no significantly restricted scope of action. Phase II called as Formation Phase is
characterized by the gradual emergence of an organizational path. The transition
from Phase II to Phase III called as Lock-in Phase is characterized by a further
restriction of the scope .
Figure-4. The constitution of a path 
On the other hand, Jaeho and Jim, 2007, stated that, the notion of ‘path
dependency’ explicitly allows for firms to have developed different capabilities
through the unique histories and strategic trajectories .
Omar R. Malik, 2008, explains that, existing path dependencies both in terms of
physical investments and managerial cognitive schemas constrain and shape the
potential for organizational transformation. Knowledge creating capabilities are
rooted in the historical technological and human resources choices of these firms and
are strongly path dependent .
Kylaheiko and others, 2002, stated the most distinctive features that constitute
the competitive advantage of the ﬁrm can now be identiﬁed. They are (i) the
continuously changing knowledge base, (ii) resources, and (iii) learning-induced
replication processes, which together generate a path-dependent ﬁrm trajectory
2.3.1. Dynamic Capabilities and Path Dependency Relationship
Jaeho Lee, Jim Slater, 2007, states that, rather, RBV (Resourced Based View)
posits that a firm with appropriate resources and capabilities may sustain competitive
advantage through FDI, but, though achieving this may be path dependent, there is
no prescribed path .
Also Omar R. Malik, 2008, presence of appropriate dynamic capabilities allows
firms to compensate for path dependencies and implement organizational change in
effective ways .
By adding that, Jaeho Lee, Jim Slater, 2007, explain that, dynamic
competitiveness and locational strategy of the firms in those countries, and in
particular, the path-dependency of their upgrading of core competencies .
Jean-Philippe Vergne and Rodolphe Durand, 2010, detailed explained that, path
dependence can be a property of capabilities when a contingently-triggered
capability path is subject to self-reinforcement (i.e., a set of positive and negative
mechanisms that increases the attractiveness of a path relative to others). It
conceives of path dependence as a property that can (but need not) characterize
dynamic capabilities .
K. Kylaheiko, J. Sandstrom, V. Virkkunen, 2002, defines real options as, the real
options perspective has the potential of helping dynamize existing theories of the
Also adding some beneficial information such as, the implicit managerial and
operating ﬂexibilities that are embedded in many non-ﬁnancial assets and liabilities
are known as real options. They represent management’s ability to delay an
irreversible decision until after some uncertainty has been resolved .
2.4.1. Path Dependency and Real Options Relationship
Kylaheiko and others, 2002, stated that, many path-dependencies typical for
human behavior in general (remember our story about the emergence of routines
and capabilities) and technological development in particular also automatically
reduce the amount of alternative options. .
On the other hand, Omar 2008, make a research about LDC (Low Developed
Country) firm's evolutionary fitness and stated a model which explain a dynamic
capabilities-based model of LDC firm's evolutionary fitness shown as Figure-5.
Figure-5. A dynamic capabilities-based model of LDC firm's evolutionary fitness
According to the these model;
• LDC firms with strong core and complementary capabilities should choose
scale and scope building strategies, and build an acquisition dynamic
capability to enhance evolutionary fitness.
• Alliances with MNEs are recommended strategies for LDC firms with weak
core and strong complementary capabilities, along with structuring
alliances in ways that create relational rents, and building a relational
• LDC firms with weak core and complementary capabilities will display a
propensity to deploy political strategies, which combined with a political
dynamic capability, will reduce the negative impact of these weak
capabilities on evolutionary fitness .
In this article KOCTAS is focused. We believe that the case study methodology
is best suited to investigating the uniqueness of strategy, investment and service
development dynamics capabilities.
A case study can be employed when it rises the question of what specially can
be learned about even the single case  and, conventionally used, the case
methodology can shed light on understanding the development process that
KOCTAS has experienced in terms of its pertinence to Resourced Based View
theories and the strategy, investment and service development phases.
While it is likely that quantitative methodology would yield ambiguous
empirical results about KOCTAS's emergence and performance, it was expected
that the case study would provide a more in-depth and clear analysis of the
factors which led to success in terms of Dynamic Capabilities accounts of strategy
and competitive business environment.
In methodology, first of all main terminologies which are discussed in
Literature Review, are defined. Then according to the definitions, a new
framework is defined for KOCTAS business model.
Core competencies are the collective learning in organizations, and
involve how to coordinate diverse production skills and integrate multiple
streams of technologies.
Capability is the sum of expertise, capacity and all core competencies of
Dynamic Capabilities are firms’ current and unexplored abilities,
capabilities and competencies which are using to get advantages in all kind
of environments. Consist of 3 sub capabilities, such as;
Strategy Development Capability is ability to create newest,
effective and sustainable advantages in rapidly changed
Investment Development Capability is ability to having
investment and entrepreneurship capability in risky times.
New Service Development Capability is ability to create and
serve new, innovative, customer based and profitable services based
Path Dependency is set of decisions and milestones which are allow for
companies develop new capabilities based on firm history, strategy and
Real Options are set of decisions and/or alternatives about firms, which
are chosen or will be chosen.
According to the new definitions, a new framework is proposed shown as
When framework is analyzed, these main results can be stated.
1. Firm’s current core competencies and capabilities depend on firm’s current
situation, historical decisions and main strategic which are given before. Thus,
path dependency and capabilities have positive relation.
2. If firm choses path dependent way of alternative, real options for firm is
decrease. Thus, path dependency and real options have negative relation.
3. On the other hand, firm has some real options, and if number of real options
is increasing, firms capabilities are increasing or vice versa.
4. In another side, some firms have Dynamic Capabilities, which consist of 3 sub
capabilities, such as Strategy Development Capability, Investment
Development Capability and New Service Development Capability. If firms can
use and develop its Strategy Development Capability, it will positively affect
both of Investment Development Capability and New Service Development
Capability. To sum up, firms Dynamic Capability power will be increasing.
5. If Dynamic Capability of firm increases, these situation will affect the others
component in a different way, such as;
a. Dynamic Capability will affect positively firm’s capability. Thus, Dynamic
Capability and capabilities have positive relation.
b. Dynamic Capability will decrease the probability of choosing path
dependent alternatives or strategies. Thus, Dynamic Capability and
path dependency have negative relation. Also because of negative
relationship between path dependency and real options, strategic
alternatives and/or options will be increased for firms.
c. Dynamic Capability will affect positively firm’s real options. Thus,
Dynamic Capability and real options have positive relation. Also
because of increasing alternatives of firm, this will affect positively firms
capability positively, and firms capabilities will increase.
Figure-6. Proposed Dynamic Capability Using and Development Framework
To sum up, firms capabilities and strategic options are dependent not only
current situation but also chosen ways for future. Thus, using and creating
dynamic capabilities are become important issue for companies.
Overview of KOCTAS
KOCTAS has founded by Vehbi Koç in 1955. Actually, KOCTAS was one of the first
companies of Koç Holding, with a history dating back to the 1930s as a wholesaler of
construction materials .
The company entered the retail sector in 1995, opening its first store in 1996 in
İzmir Bornova. This was followed by stores in Antalya, İzmir Balçova, and Bodrum. In
2000, a joint venture contract was signed with Kingfisher Group - B&Q which is the
market leader in Europe in the home improvement sector .
Store openings continued, and KOCTAS now operates stores in Istanbul Kartal,
Şişli, Yenibosna, Eyüp and Optimum Mall, in Ankara Ankamall and Çankaya 365 Mall,
İzmir Bornova, Balçova and Mavişehir, as well as in Antalya, Alanya, Edremit,
Kuşadası, Bodrum, İzmit, Bursa Korupark Mall, Forum Mersin Mall, Eskişehir, Forum
Trabzon Mall and Konya KOCTAS stores offer many domestic and foreign brands to
consumers, with affordable prices and easy payment options through its strong
supply chain and international buying power. Total sales area of the 21 KOCTAS
stores is almost 112,600 square meters.
With the advantages of geographical prevalence, its wide range of high quality
products, brand recognition, confidence of being a company in the Koç Group, and
international supply synergy with its partner, KOCTAS has repositioned itself as a
“home improvement retailer” rather than a “DIY brand” and provides consumers with
“one stop shopping”. KOCTAS distinguishes itself from its competitors by introducing
new global trends and ideas through its partner, adapting them as appropriate to the
Turkish market based upon its great experience within the sector.
In KOCTAS stores, ten thousands of products are sold; from decorative products
to furniture, home textile products, kitchen items, bathroom fixtures, ceramics,
garden furniture, lighting products, room sets, ready-made curtains, carpets, paint
Consumers who would like to beautify their homes and desire to improve their
standards of living can receive turn-key home remodeling service from KOCTAS.
After conducting an evaluation to establish a mutually acceptable scope of work,
KOCTAS prepares a detailed project plan and budget for the customer. Friendly,
expert KOCTAS employees support the customer throughout the decision-making
process regarding home decoration, and answer all their questions regarding the
recommended products and services. KOCTAS, believing that each house has its own
characteristic story, closely monitors global trends and determines all the basic
details for redecorating a home according to the needs and tastes of its customers.
KOCTAS who initiated an order by phone/internet service with their new system
named “Call us/ Just click to our web site, Let Us Deliver!” delivers products to all
provinces and districts in Turkey. Products can be ordered through 0216/0212 444 0
884 (the KOCTAS Customer Line) or the KOCTAS web site (www.koctas.com.tr).
In today, repositioning itself as a ”home improvement and home refurbishing”
provider in the industry, KOCTAS stands at the top of sector with the total sales area
of over 170.000 m2 in 31 stores, in 19 cities, while offering products to fit customer
choices from 1.794 domestic and foreign suppliers .
Strategic Changes and Strategy Development Phase
Between 1955-1996, KOCTAS was one of the best players who worked as
construction and building material wholesale dealer. At the beginning of 1995, the
company has decided to enter the retail sector, because of the market suitability and
customer needs. In 1996, first store opened in Bornova / İzmir as retail concept. This
is the first strategic changes for KOCTAS.
After this strategic change, in 1998, 3 new stores have opened. Antalya store
opened in Antalya, Balçova store opened in İzmir, Bodrum store opened in Muğla.
Second and the most important strategic revolution for KOCTAS, was occurred in
2000. Joint Venture agreement with KOÇ Group and Kingfisher Group has been
made. B&Q (Kingfisher Group’s firm) (%50) and KOÇ Group (%50) have signed a
new contract to making only “home improvement business” as KOCTAS brand. To
understand why this joint venture is so important, we must look at Kingfisher and
Kingfisher is Europe's leading home improvement retail group and the third
largest in the world, with leading market positions in the UK, France, Poland, Turkey
and China. Kingfisher operates over 800 stores in eight countries in Europe and Asia.
Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also
has a 21% interest in, and strategic alliance with Hornbach, Germany's leading DIY
(Do it yourself!) warehouse retailer, with over 120 stores across Europe .
B&Q is the UK's leading DIY and garden center retailer, offering over 45,000
inspirational home improvement and garden products for the homemaker, occasional
to serious DIY'er, and trade professionals. B&Q is the number one DIY retailer in
Europe and the third largest in the world, with more than 60 stores opened
internationally, including B&Q Beijing, which is now the largest B&Q store in the
world. B&Q is the biggest home improvement retailer in the UK, with 14.8% of the
repair, maintenance and improvement market share (includes DIY and builders
merchant sales) .
After the Joint Venture, first large format store in Kartal / İstanbul on 10.000 m2,
opened in 2001.
KOCTAS has redefined its strategic frameworks such as Vision/ Mission/ Values
as shown in Figure-1.
•To be the leading company in home improvement retailing at international
standards in Turkey and neighborhood countries.
•To help our customers to improve their homes and living conditions by providing
them wide range of products, affordable prices, suitable payment methods and
expert service; in this manner to make the home improvement retailing sector
•To provide opinions and solutions for people to help them improve their homes and
•To Focus On The Customer
•Work towards what is best and right for the customer
•To Create Values
•Effectiveness and Efficiency
•Respect for People and Environment
•To Succeed Together
•Frankness and Openness
Figure-1. Vision, Mission, Purpose and Values of KOCTAS 
Second store in İstanbul opened in Cevahir Shopping Center in Şişli and has
been brought new ground in home improvement retail sector in 2005. Further years,
until 2010, 18 new stores opened.
In 2010, Kingfisher and its group companies have prepared a new strategic
plan as shown in Figure-2.
•Our purpose in life is to help people create homes they feel good
•Our ambition- The leading local home improvement retailer, for our
customers, teams, communities and shareholders.
•Our financial objectives is to have the best sales densities and
consistent double digit profit growth.
•A growth strategy based on one core business model, LFL sales
growth and new store expansion.
•We lead in makng it easier for customers, in innovation and in
•One core business model- 80%common proposition, 20% local
•Destination home improvement
•Multi-specialist across 4 core categories- building/technical,
showroom, decor and seasonal.
•Value led, sales in volume
•Two store formats-Big Box & Brico
•Promote our homemade talent
•Only profitable services
•Grow space in all existing markets
•New geographical acqusition based on 3 criteria- ability to lead,
supporting our financial objective and avaible homemade talent.
•3 potential futher opportunties for growth:
•1.Take Brico model to new markets
•2.Develope a Franchise model
•3.Develope a single European online business model
•Protect each others reputations at all times
•Improve each market together
Figure-2. Kingfisher Group New Strategic Plan 
According to this plan, KOCTAS has taken some corrective actions.
Due to group financial objectives is to have the best sales densities and
consistent double digit profit growth, KOCTAS has changed its products range, type,
and quantity. For example, KOCTAS has stopped to selling white goods, TV,
telephones. At the end of the 2011, KOCTAS is planning fully come out these range
Also KOCTAS has increased the quantity and sales ratio of import products which
are profitable, in its product range. Finally, for getting two digits profit growth,
number of SKU (stock keeping unit) has increased and has focused more profitable
Investment Strategy and Investment Development Phase
As we mention, first store opened in Bornova / İzmir on 3.800 m2 in 1999, after
entered into home improvement retailing business in 1995. Three years later, in
1998, Antalya store opened in Antalya on 2.700 m2. In same year, Balçova store
opened in İzmir on 5.000 m2 and Bodrum store opened in Muğla on 5.000 m2. These
tree stores was the change to see how home improvement retailing business is going
Two years later, Joint Venture agreement with KOÇ Group and Kingfisher Group
has been made. B&Q (Kingfisher Group’s firm) (%50) and KOÇ Group (%50) have
signed a new contract to making only “home improvement business” as KOCTAS
brand. By following these Joint Venture agreement, first large format store in Kartal /
İstanbul on 10.000 m2 opened.
After this period, not only effect of Joint Venture Agreement, but also rivals
aggressive store opening strategy, such as IKEA and Bauhaus as global competitor,
also Tekzen as local competitor, KOCTAS has changed its store opening strategy.
According to the new strategy, some crucial criteria’s were determined, such as
GDP, Urban population, etc. for choosing city where stores will be opened. For
example, if GDP is over 30 bn. and urban population is over 2.500 K, these types of
cities, such as Istanbul, Ankara and Izmir, defined as Top 3 Cities. If GDP is over 5
bn. and urban population is over 400 K, these types of cities, such as Kocaeli, Bursa,
Eskisehir, etc. defined as Big Cities. If GDP is between 3-5 bn. and urban population
is over 400 K, these types of cities, such as Manisa, Samsun, Malatya etc. defined as
Medium Cities. If GDP is over 1 bn. and urban population is over 200 K, these types
of cities, such as Edirne, Çanakkale, Balikesir etc. defined as Small Cities. The other
cities, which are out of ranges, are defined as Unsuitable Cities for investment.
Based on this new investment strategy, for Top 3 Cities, at least 3 stores can be
opened. For Big Cities, at least 2 stores can be opened. For Medium Cities, at least 1
store can be opened. For Small Cities, if conditions are available, 1 store can be
opened in the future. For Unsuitable Cities, investment is not an option, but if further
conditions change, investment option can be revised.
When we look the implementation of this strategy, we can clearly see the parallel
actions with strategy. Second store in İstanbul opened in Cevahir Shopping Center in
Şişli and has been brought new ground in home improvement retail sector in 2005
on 6.700 m2. Same year Edremit store opened in Balıkesir. In 2007, Kuşadası store
opened in Aydın on 2.300 m2, the largest KOCTAS store opened in Ankara on 11.000
m2 and third store in Yenibosna / İstanbul opened on 10.000 m2.
In 2007, store openings have gone on. İzmit store opened in Kocaeli on 6.500
m2, Bursa store opened in Bursa on 3.700 m2, Eskişehir store opened in Eskişehir on
4.000 m2 and second store in Antalya opened in Alanya on 6.500 m2. Also in this
period, Balçova store in İzmir has moved to its new place on 6.000 m2.
2008 was one of the best years for KOCTAS. Second store in Ankara opened in
Çankaya on 4.000 m2, Trabzon store opened in Trabzon on 4.000 m2, third store in
İzmir opened in Çiğli on 5.400 m2, Konya store opened in Konya on 5.800 m2, and
forth store in İstanbul opened in Yenisahra on 4.700 m2.
In 2009, 5 new stores opened. 5th store in Istanbul opened in Beylikdüzü on
7.500 m2, 3rd store in Antalya opened in Dokuma on 6.500 m2, Kayseri store opened
in Kayseri on 4.800 m2, Malatya store opened in Malatya on 3.800 m2, and Denizli
store opened in Denizli on 4.200 m2.
Also in 2010, store opening strategy has been implemented continuous. In this
period, Bodrum store has moved to its new place on 5.000 m2, Afyon store opened in
Afyon on 4.300 m2, Adapazarı store opened in Sakarya on 4.000 m2, Gebze store
opened in Kocaeli on 6.400 m2 and second store called Bursa-2 store opened in
Bursa on 8.100 m2.
Finally, in 2011, Adana store opened in Adana and total indoor area in 31 stores
of KOCTAS is almost 170.000 square meters as shown in Figure-3.
Figure-3. KOCTAS and Competitor’s Store Distribution in Turkey (end of 2010)
Innovation and New Service Development Phase
Koçtaş was one of the first companies of Koç Holding, with a history dating back
to the 1930s as a wholesaler of construction materials. In earlier stages, KOCTAS has
gave services as construction and building material wholesale dealer, and gave
service to big construction companies and retail dealers. KOCTAS main customer
were many KOC Group company, such as Migros, TAT, etc. also the other out of KOC
Group firms. By using its purchasing power and supply chain ability, KOCTAS had
continued this business model until 1995.
The company entered the retail sector in 1995, opening its first store in 1996 in
İzmir Bornova. In this period, KOCTAS has enlarged its selling products quantity and
increased number of department. In KOCTAS stores, five thousands of products are
sold; from decorative products to furniture, home textile products, kitchen items,
bathroom fixtures, ceramics, garden furniture, lighting products, room sets, readymade curtains, carpets, paint and flooring.
On the other hand, KOCTAS has introduced two new services in 1996. Firstly,
Transportation Service has started. In Izmir, this service has begun, and has offered
to customers. Transportation service was increased the quantity of selling products.
Another innovative service was Special Sales Service. This service was used some
special products and departments such as doors, cabinets, kitchen cabinets, bath
cabinets, shower bath etc. In this service, customers chose a product, and then
producer firm goes to customer address to take the measurements where to product
will be implemented, and finally after constant time, for example 20-30 days,
products are installed. By launching this service, KOCTAS stock area was decreasing
and selling area was increasing. Also customer were satisfied, the service quality and
deadline. This was followed by stores in Antalya, İzmir Balçova, and Bodrum. In the
new stores and in the new places, customers have taken an interest in these two
By 2000 year was one of the turning points for KOCTAS. This year, a joint
venture contract was signed with Kingfisher Group - B&Q which is the market leader
in Europe in the home improvement sector. B&Q (Kingfisher Group’s firm) (%50) and
KOÇ Group (%50) have signed a new contract to making only “home improvement
business” as KOCTAS brand. Because of this agreement, many new innovative and
DIY (Do it yourself!) concept services has launched. In 2011, Transportation Service
has fallowed in cash out system and has become reportable. Cities where KOCTAS
stores were, has divided 3 main regions and for each region constant Transportation
prices have set up. Also by campaign, such as if total basket reaches 500 TL,
transportation service is free, transportation service using has tried to increase. For
this service, KOCTAS got agreement with a third party transportation firm, and gave
all operational works to this firm.
In 2001, a new complementary service has launched: Installation Service.
Installation Service has used for knockdown products such as, desk, cabinets, shelf,
bath products, furniture, etc. Especially people who works until nights and/or people
who does not anything about installation a product, has showed an interest in this
service. For this service, KOCTAS got agreement with same transportation firm, and
gave all operational works about transportation and installation to this firm. Thereby,
two complementary services have combined and operational processes were
At same year, Expert Consultancy Service has started in Kartal store. KOCTAS
offered to customer restoring their home with the recommendations of KOCTAS
expert personnel. Also by offering to customer a service through KOCTAS sales
representatives who are each experts on their relevant fields. KOCTAS proposed
customer to benefit from KOCTAS expertise for specialized ideas and solutions to
restore and beatify their home in addition to high quality products and ten thousands
of options. KOCTAS was at customers’ disposal to beautify their home with several
ideas such as the selection of a suitable wall color for their home and their mood, the
care of the plants they purchase, selection of an air-conditioner with technical
characteristics that suit their room as well as KOCTAS free architectural service for
their bathroom or kitchen. KOCTAS invites everybody who says “I love my home” to
benefit from our expertise .
In 2004, KOCTAS has launched professional service to professional’s customer:
Trade Card. With this serving Trade Customer Services such as; advising service on
technical matters, opportunity to place orders via the phone and fax, delivery within
24 hours, at the latest, following the acceptance of the order. Also winning chance
5% points at Koçtaş with the trade card special for professionals. Expecting all the
professionals engaged in construction, hotel management, decoration, paint, and etc.
to our stores to take their trade cards. Some benefits of the Trade Card are
%5 money points
Opportunity to benefit from all installment options applicable at the store
Free shipment for purchases amounting to TRY 1,500 and above (up to 30
Opportunity to place orders via the phone and fax .
One year later, in 2005, KOCTAS has introduced a new alternative sales channel:
Phone Orders Service. KOCTAS who initiated an order by phone service with their
new system named “Call us Let Us Deliver!” delivers products to all provinces and
districts in Turkey. Products can be ordered through 0216/0212 444 0 884 (the
KOCTAS Customer Line) .
In 2006, another alternative sales channel, corporate web site www.koctas.com.tr
opened and B2C selling has started. KOCTAS who initiated an order by internet
service with their new system named “Just click to our web site, Let Us Deliver!”
delivers products to all provinces and districts in Turkey. Products can be ordered
through the KOCTAS web site (www.koctas.com.tr) .
At the same year, KOCTAS Card has introduced as Customer Loyalty Card. This
loyalty system was designed another KOC Group called TANI A.S. As of 2010, there
are 2.679.600 KOCTAS cards. 57% of active cards. 53% of KOCTAS total sales with
KOCTAS cards. Redemption rate 59%. ATV for transactions with card is around 126
TL and with campaigns around 385 TL. In 2010, 107 CRM campaigns have done and
77.243 customers got benefit from this campaign .
In March 2007, KOCTAS has been introduced vSRM-Supplier Relationship
Management System. All information between KOCTAS and its suppliers has
transferred this platform. By using this system, costs and information time has
decreased, customer problems have been done quickly and historical report can be
taken. Totally, operational processes between KOCTAS, supplier and customer have
been developed by using this system .
In 2009, KOCTAS has opened a new B2B firm called DEPOFIX. DEPOFIX opened
to directly selling equipment and tools from supplier to buyers such as, big firms,
Production Company, etc. in long term agreements and B2B selling has started .
At same year, in September 2009, Expert Consultancy Service has been enlarged
and developed and announced in “Complete Solutions Service” (Special Projects).
KOCTAS expert staff consisting of architects gives customer new ideas to beatify
their home, and offers cost-effective solutions to put these ideas into action. Thanks
to the architectural projecting and advisory services, you can redesign their home all
over or any part of their bathroom or kitchen with several price and installment
options. Customers can benefit from the following Koçtaş services when redesigning
Complete home restoration
Water-electric installation replacement
Floor covering applications .
In 2010, Natural Gas Complete Projects has been launched by KOCTAS. In this
service, detection, projection, capacity plans and product determination, design,
project approval, opening gas process, activating combi boiler, delivery and 2 year
guaranty activities and process given by KOCTAS. .
In first quarter or 2011, two new services have launched: Thermal Insulation and
Landscaping Services at some stores. Same as other Project Sales, all activities and
processes are made by KOCTAS .
5. Conclusion and Future Research
As defined in introduction, in this paper first of all detailed literature review has
been done. For this purpose first of all capability and core competencies are defined
by other writers. Then dynamic capabilities and path dependency concept are
defined relation between these concepts are stated. Then real options are defined
and relation between dynamic capability-real options and real options-path
dependency are stated. Then new definition about these concept and terminologies
are defined. After that a new framework is proposed to define relationship between
core competencies, capabilities, dynamic capabilities, path dependency, and real
Main findings, results and further implications for managers and researcher are
Current capabilities of firm effect positively path dependency and firm can
be chose path dependent way or/and strategic options, because of
historical effect of capabilities.
If these capabilities can be developed and used as dynamic capability, this
relation way changes and probability of chosen path dependent alternative
Dynamic capabilities consist not only strategic but also new service and
investment, and they affect each other’s.
Chosen path dependent way or strategy effect real options negatively, and
decrease the value or number of strategic options.
If real options value or/and number can be increased by using dynamic
capabilities, these effect positively firm capability.
To sum up, firms capabilities and strategic options are dependent not only
current situation but also chosen ways for future. Thus, using and creating dynamic
capabilities are become important issue for companies.
Table A1. History of KOCTAS
History of KOCTAS
Founded by Vehbi Koç as one of the first firm of KOÇ Group
Worked as construction and building material wholesale dealer,
and gave service to big construction companies and retail
Entered into home improvement retailing business
First store opened in Bornova / İzmir
Transportation Service has started
Special Sales Service has started
Antalya store opened in Antalya.
Balçova store opened in İzmir
Bodrum store opened in Muğla
Joint Venture agreement with KOÇ Group and Kingfisher Group
has been made. B&Q (Kingfisher Group’s firm) (%50) and KOÇ
Group (%50) have signed a new contract to making only “home
improvement business” as KOCTAS brand.
After the Joint Venture, first large format store in Kartal /
İstanbul on 10.000 m2, opened
Transportation Service has fallowed in cash out system and has
Installation Services has started
Expert Consultancy Service has started in Kartal store
Second store in İstanbul opened in Cevahir Shopping Center in
Şişli and has been brought new ground in home improvement
Edremit store opened in Balıkesir.
Phone Orders has started
Kuşadası store opened in Aydın.
The largest KOCTAS store opened in Ankara on 11.000 m2
Third store in Yenibosna / İstanbul opened.
Corporate web site www.koctas.com.tr opened and B2C selling
KOCTAS Card has introduced as Customer Loyalty Card
İzmit store opened in Kocaeli.
Bursa store opened in Bursa
Balçova store in İzmir has moved to its new place
Eskişehir store opened in Eskişehir
Second store in Antalya opened in Alanya
vSRM-Supplier Relationship Management System has been used
Second store in Ankara opened in Çankaya
Trabzon store opened in Trabzon
Third store in İzmir opened in Çiğli
Konya store opened in Konya
Forth store in İstanbul opened in Yenisahra
DEPOFIX opened to directly selling equipment and tools from
supplier to buyers such as, big firms, production company, etc.
in long term agreements and B2B selling has started.
5th store in Istanbul opened in Beylikdüzü
3rd store in Antalya opened in Dokuma
Kayseri store opened in Kayseri
Malatya store opened in Malatya
Denizli store opened in Denizli
Expert Consultancy Service has been enlarged and developed
and announced in “Complete Solutions Service” (Special
Bodrum store has moved to its new place
Afyon store opened in Afyon
Adapazarı store opened in Sakarya
Gebze store opened in Kocaeli
Bursa-2 store opened in Bursa
Natural Gas Complete Projects
Adana store opened in Adana
Total indoor area in 31 stores of KOCTAS is almost 170.000
 Url-1 <http://www.koctas.com.tr/Kurumsal/Content.asp?TID=515>, received
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