*--Explain the concept of core rigidity. Do long lived organizations inevitably have difficulties avoiding the problem? Use examples from automobile industry --*
Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals (Hanson, 2008). Those capabilities must include usage of services or resources being valuable, rare, non-substitutable and costly to imitate. Using the capabilities strategically will make a core competency, which brings the significance or a valuable asset also referred as core competency for a firm. Depending on the industry, competitor environment, general environment such as demographic, socio cultural, economic, political/legal would vary. Any firms that find their signature activity would make the strong stand in the market for its firm. This combination and harmonization of multiple abilities make competencies difficult to imitate.
Once the company establishes the core competencies that can be well differentiated over other firms, and uses them well they are likely to enjoy profit and eventually finding themselves in significant market place. Possible examples of core competencies are Wal-mart in inventory management, Honda in dealer management and product realization and Dell’s distribution system.
Unfortunately many core competencies do not seem to last forever. As time elapse, core competencies become vulnerable to the changes in general, industry environment. Firms that do not acknowledge or indifferent to the changes, or refuse to change, in their myopia are likely to suffer financially or from any other areas in the near or not-so-long future. Core rigidity can be explained as “flip side, the dark side of core capabilities is revealed due to external events when new competitors figure out a better way to serve the firm’s customers, when new technologies emerge or when political or social events shift the ground underneath” (Leonard-Barton, N.D).
To be able to overcome...
Hope, J & Hope, T. (1997) Competing in the third wave: The ten key management issues of the information age, Havard Business Press,
Please join StudyMode to read the full document