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Presented by:
Arshdeep Singh
Roll no.- 6805
CORE COMPETENCY
Core competency are the skills, characteristics, and
assets that set your company apart from
competitors. They are the fuel for innovation and
the roots of competitive advantage.
COMPETENCIES DO NOT MEAN:
Outspending competitors on research and
development
Cost sharing among SBU’s
Vertical integration
THE DIVERSIFIED CORPORATION
IDENTIFYING YOUR CORE COMPETENCIES
Compile a list of capabilities.
What do you excel at?
Think of your most skilled employees.
What products have been your past winners?
BE REALISTIC
“ Few companies are likely
to build world leadership in
more than five or six
fundamental competencies”
NOW THE TEST
Does this competence provide potential access to
a wide variety of markets?
Does this competence make a significant
contribution to the perceived customer benefits of
the end product?
Is this competence difficult for competitors to
imitate?
VARIETY OF MARKETS
What do small cars, luxury cars, sports cars have in
common?
They are all the result of MSIL know-how in
miniaturization, microprocessor design, material
science, and ultrathin precision casing.
EASY TO IMITATE?
Maruti is a market leader in car manufacturing in
India. Have you ever seen a Maruti luxury car?
Luxury is not one of MSIL competencies. They
could put one on the market by outsourcing the
design and production.
Would this give them any manufacturing share? Or
just temporary market share?
SO WHAT?
If you don’t know what your core competencies
are, you may spin off a business unit that contains
your most competitive skills, employees, or core
products.
Long term strategy involves constant innovation.
Core competencies provide a market position that
allows a company to influence what products will be
available in the future.
STRATEGIC ARCHITECTURE
A company’s future is
determined by it’s core
competencies. These
competencies define the
architecture and characteristics
of the global competitive firm.
BOUNDARY LESS ORGANIZATION
In the old diversified corporation, ideas and
technologies are reluctantly shared from one SBU
to the next, if at all.
Boundaries seem transparent when SBU’s share
core competencies and core products. These
resources come from the firm.
RESOURCE ALLOCATION
When core competencies are the roots of the firm,
specialized employees and core products can be
allocated to various SBU’s.
At Maruti, specialized employees move between
camera and printer products regularly.
INNOVATION
Using core competencies, new technologies can be
developed without heavy R&D costs. Fiat: Drive your way
Maruti sazuki : Count on us
Hyundai: New thinking new possibilities
Honda: Off-road buggy
Ford: Go further
COMPETENCE BUILDING
The focus of today’s global firm should be in
competence building.
Constantly improving competencies provides for
new integrated technologies.
Competencies provide focus for long-term goals.
COMPETITIVE ADVANTAGE
Short-term market share can be won by anyone
with a good idea.
Race to get products on the shelf.
Long-term success involves competency structured
organizations, innovation, and market consistency.
Same core products, integrated into new end
products, creating new markets.
SBU’S VS. CORE COMPETENCIES
The old concept of the diversified corporation is a
portfolio of strategic business units (SBU’s) within a
similar product or customer category. Each SBU’s
goal is to put competitive products on the shelf
today .
Today’s corporation must maintain competitiveness
by developing core competencies. These
competencies determine the strategic architecture
of the firm. Competencies must translate into core
products, which significantly contribute to the firm’s
end products.
CASE STUDY (MARUTI SUZUKI)
Maruti Suzuki India ltd. is a subsidiary of Suzuki
motor corp., Japan. MSIL has been the leader of
the Indian car market for over two and a half
decades.
Its Core competencies:
1. Their core competencies lies in manufacturing
small cars.
2. Another competency is the fuel efficiency factor
that their car provides.
CONTD…
3. Maruti competency lies also in the fact that they
are priced very effectively.
4. Maruti suzuki’s yet another competency lie in the
fact that the customer trust they are having.
WHY COMPETENCIES?
Even good marketing wont make a “me too” firm
competitive in the long run.
Competencies are enhanced with time.
Make or buy decisions are simplified.
Non-competencies can be supplemented with
strategic alliances and licensing agreements.
SUMMARY
Learn your competencies
Develop your competencies
Structure your organization around your
competencies
Involve core products in all end products
Outsource non-competencies with strategic
alliances and licensing.
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