Core Competencies.Doc

Topics: Strategic management, Milk, Management Pages: 10 (2577 words) Published: March 1, 2009
Today in Hong Kong, many organizations have their own business strategy that helps them compete successfully in the markets. There is a proverb, “to know the enemy and know yourself, and you can fight a hundred battles with no danger of defeat”. The competitive advantage is a set of objectives, plans, and policies. One of the most important factors of developing a business strategy is identifying the organization’s core competencies. Therefore, an important part of strategic planning is identifying and predicting the core competencies.

Core Competencies
According to Prahalad and Hamel (1990)

“Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies.”

From their points of view the core competencies are the collective knowledge and skills that distinguish an organization from the competition, which should also be difficult for the competition to imitate. In effect, core competencies provide the basis for developing new products and services, and they are a primary factor in determining an organization’s long-term competitiveness. Moreover, a true core competence, and could provide a competitive advantage.

To know the core competencies could achieve a competitive advantage. It should be include some analysis or theory, e.g. the PESTEL, SWOT, EVR Congruence, Capabilities and 5-Force etc. Let us try to discuss under the followings.

Core competence at The Kowloon Dairy Ltd.

Kowloon Dairy was founded in 1940 by Mr. George Ahwee and Mr. Rudy Choy. At the beginning, the company produced only fresh milk. Today, they have diverged into producing a variety of milk drinks and ice-cream products. She is one of the major suppliers of milk products in Hong Kong. The following are the analysis of Kowloon Dairy’s competitive strategies for achieving the organization’s competitive advantage.

PESTEL Analysis for The Kowloon Dairy Ltd.
The PESTEL analysis measures the market for understanding what environmental factors are affecting the organisation. The PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal.

In the view of the PESTEL analysis, there should be some areas of which to be highlighted, e.g. in the social area, more people care about their health and likely to try to stay slim in recently, they choose products with low fat milk or others health drink products (non-milk). Moreover, some people are lactose intolerant. These problems have not been solved.

In the economic area, the main production line of Kowloon Diary is in Mainland China. Since China became a member of the World Trade Organization (WTO), the tax revenue could be revised to match the request from the WTO to keep a fair competitive economic environment, e.g. the land value-added tax and tax on slaughtering animals would be eliminated. Moreover, the Mainland China has researched to unify the profit tax in the future. These factors would be affected the cost of sales.

In the technological area, to follow technology’s progress, Kowloon Dairy adopted full automatically production in the beginning of the 70’s century, starting from the milking of the cows to the disinfecting of the milk and finally the bottling. The procedure of handling the fresh milk would not be done by people, to guarantee the highest level of sanitation and confidence to their customers.

SWOT Analysis for The Kowloon Dairy Ltd.

PESTEL helps to identify SWOT factors. SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses are the internal factors, which analysis will state the ability of the organization to respond to these potentials. Opportunities and threats are the external factors, which give rise to the potential and to be less well positioned for an organization to better satisfy customer needs. This is an important tool for auditing the...

References: Guth, W.D. (1980), “Corporate growth strategies”, Journal of business strategy, Vol. 1, No, 2, Fall, pp.56-62.
Porter, M. (1979), “How competitive forces share strategy”, Harvard Business Review, Vol. 57, No. 2, March-April, pp.64-74
Porter, M (1984), “Competitive Advantage”: New York, NY, The Free Press
Porter, M (1985), “Competitive Advantage: Creating and Sustaining Superior Performance”, New York, NY The Free Press
Prahalad, C.K
Stalk, G.., Evans, P., Shulman, L.E. (1992), “Competing on capabilities: the new rules of corporate strategy”, Harvard Business Review, pp.57-69.
Thompson, J.L. (1999), “A Strategic Perspective of Entrepreneurship”, International Journal of Entrepreneurial Behaviour & Research, Vol. 5, No. 6, pp.279-296.
Vilijoen, John (1994, 2nd ed.), “Strategic Management : Planning and Implementing Successful Corporate Strategies”, Longman Australia,, pp.243-245.
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