Market driven organizations focus on understanding and satisfying customer needs above all else. They excel at generating and using superior information about customers and competitors through interfunctional coordination. Core capabilities include market sensing to understand customers and linking functions to closely communicate with customers. Capabilities are skills developed through organizational processes that cannot be easily imitated and provide strategic advantages when applied to enhance market orientation.

1. Market Driven Organization

2. Market Orientation:
Set of beliefs that puts customers’
interests first
Superior skills of organization in Ability of organization to generate
understanding and satisfying and use superior information
customers about customers and competition
Interfunctional co-ordination for
the creation of superior customer
value

3. Capabilities:
Link between capabilities
and strategy
Combination of skills
and learning
exercised through Market driven
organizational organizations superior in
processes and ensure market sensing and
superior co- customer linking
ordination of
functional activities Applying capabilities
approach to design
programs to enhance
market orientation

4. Capabilities and Strategy:
Capabilities: Using assets more advantageously
Cannot be given a monetary value
Embedded in organizational culture. Cannot be imitated
Porter – Differentiate and make strategic investments, pricing strategies etc.
Capabilities Approach: Best way to determine and improve firm-specific resources

5. Core competencies:
Distinctive capabilities necessary to move
products and services through value chain
They must provide a significant contribution to
customer value
Importance vs Performance trade-off
• Customer not aware of processes

6. How to use capabilities?
Orient outside-in and
inside-out processes
through spanning
processes

7. Market Sensing as a Distinctive
Capability:
Customer
Orientation
Competitor
Orientation
Interfunctional co-
ordination

8. Customer Linking as a Distinctive
Capability:
Particularly in B2B
Starts with co-ordination of inside out and spanning
capabilities
Close communication and joint problem solving
Eg: Toyota and manufacturers, Walmart and P&G

9. Examples:
Honda: Engine
Walmart – Cross- Marriott Hotels Eye for
Technology and Dealer
docking Facility Detail (66 steps)
Management
• Difficulty in observing
capabilities
• Knowledge tacit and
dispersed
• Technical expertise
and learning
• Imitation difficult:
Result of constant
learning and difficult
to observe over many
functional areas