Core Competences

Topics: Tacit knowledge, Management, Strategic management Pages: 32 (1375 words) Published: April 26, 2015
Core Competences
The Source of Sustained
Competitive Advantage

Core Competences
• Why do some firms grow faster than
• They are able to respond to the market
forces that they face:
Market boundaries are changing more
Targets are elusive, and at best temporary.

“Organizations succeed in a
competitive marketplace over the
long run because they can do certain
things their customers value better
than can their competitors.”

Robert Hayes, Gary Pisano, and David Upton

Building on KSFs
• We saw in lecture 5 that senior managers need
to understand Key Success Factors, and Grant
tells us that they need to understand ‘General
Prerequisites for Success’, What the Customer
wants’ and ‘How to survive the Competition’, but
beyond this they have also to do something
extra, that makes customers come and buy form
them, not their competitors

Building on KSFs
• The question is, what should these things
• Well, whatever they should be – or rather,
are - collectively they are called a firm’s
“Competitive Advantage”
• Competitive Advantage is another of
Michael Porter’s theories

Competitive Advantage
We might define Competitive Advantage as:
“That thing or things about our business that
make customers come and buy from us,
rather than from our competitors.”
A big question in the world of strategy is whether
there is such a thing as a “Sustainable
Competitive Advantage” – that is, a competitive
advantage that can be kept going for many,
many years.

Building on KSFs
• This brings us to the twin notions of
Strengths and Weaknesses, and
Resources and Capabilities

What Are the Company’s Strengths &
• S W O T represents the first letter in
– S trengths
– W eaknesses
– O pportunities
– T hreats
• For a company’s strategy to be well-conceived, it must be – Matched to its resource strengths and overcome its
– Aimed at capturing its best market opportunities and
erecting defenses against external threats to its wellbeing

Identifying Resource
• A strength is something a firm does well

or an attribute that enhances its competitiveness

Valuable skills, competencies, or capabilities
Valuable physical assets
Valuable human assets
Valuable organizational assets
Valuable intangible assets
Important competitive capabilities
An attribute placing a company in a position of market
– Alliances or cooperative ventures with partners

Resources and
• Resources are things that the business
• They can be divided into
– Intangible assets
– Tangible Assets
– Human Resources

Resources and
• Examples:

– Intangible assets might be Logos, brand
attributes, and so on
– Tangible assets might be factories, machinery,
and so on
– Human resources would be the staff, but also
advisors, etc.
Resources are described using nouns –
machine, people, factory, brand, and so on

Resources and
• Capabilities are things that organisations
do – we describe them, then, with verbs
such as develop, manage, improve,
innovate, build and expand, selecting, and
so on.

Company Capabilities
• Stem from skills, expertise, and
experience usually representing an
– Accumulation of learning over time and
– Gradual buildup of real proficiency in
performing an activity
• Involve deliberate efforts to develop the ability to do
something, often entailing
– Selecting people with requisite knowledge and skills
– Upgrading or expanding individual abilities
– Molding work products of individuals into a cooperative
effort to create organizational ability
– A conscious effort to create intellectual capital

Capabilities to Core
• Some capabilities are necessary to meet
the three elements of KSFs – General
Prerequisites, what the firm needs to do to
meet customer needs and wants, and
what it must do to survive the...
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