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Fundamental Of strategi Managment
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27 views10 pagesFSM Unit 3
Fundamental Of strategi Managment
Uploaded by
Saini Lakhvindar singhCopyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
/ 10
ah gy ibecone eee meen
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ete
€ oF BUSING,
CLASS 4th Yr BBA-ITM
FACULTY NAME: IKANISHA R. SHAH
_ SUBJECT ESM.
UNIT 3
pAGENO. 01 t009
—
Per eeennainr 4 BBA{ITM]SEM-VI (UNIT 3)
se i E
COMPETITIVE. ADVANFAGE.& ORE COMPETENCE
{)2-Concept of Competitive Advantage ) Lon ayy
> Significance \
o> Buildé itive Advantage—
“+ Concept of Core Competence”
+ Difference between C.A. and C.C.
+ Acquiring Core Competence
~
SONCEPT OF COMPETITIVE ADVANTAGE
petit is essenti ith
rm in relation to its comy
some others in marketing. And within given function, the supe ol ly may be
rooted in different aspects of the functi - = cou Bey
‘om diffe ects; the
competitors, ox, itmay
ve have
varie Superiority can also mean Derforms a given function
differently distinct from the way other fjrms perform it. In either case, the firm
gains a competitive advantage. oR
I will be clear from the above gplanation that ineveloping a compétitive
advantage, a firm basically figures out how it can’perform ‘a particular function
or group of functions, eithés, Wi a superio: way, of in distinctive waygrelative
“fo comipetiti ie OF 5 jas to
be of value to’the giigin: and ch Without
ig Yulfilled, no compet
firm may be am
hayemoré flexi
tive advantage accrues to the firm,
inction, In other words, there are two questions;
fion in a or /distinctive way, compared to
1. Dol come function in a superior distinctive way
co the visit dictonin-sometingin tems stone
i jor.or. distineti f the firm
Gomipetitive advantage is thus supstior.or. ctive competence of the Bi
G “relative. aaeapetiien fp_some aren: The superior or distrcive cemnpstence
im ing in Jue, The areas may include
jnust mean something in terms of customer value, 1 =e a
_ practically all fanctions/activitis, which business Tn aor con
rence saarketing , R&D, production, finance, new sore
management ele. The superiority.or distineion may “go Cover the resource and
Capability dimension and factors like chology.) a 3
Outstanding leaders in any industry possess superiority/distinetion in sev
functions/areas.
===
KANISHA R. SHAM : i —
encima svasomante Al TSE ‘M-VIL ESM (UN
‘ Fow Mustrations
et Us see 0 few iste
“Toshib; bof
\ NS of competitive ad
Toshiba of exile
Ite sRb&® variety and flexibility in prodction serves as «
Mlexible manvfacturing.sysiem (FMS),
ctvarieties of the given product in the
1: Por
seupetitive advantage, Through a
Toshiba Manutnetures differ
rent produ
competitive advantage o} ‘ x
Sony: As a contrast to the Hexibilty of Toshiba, Sony epj@yS the advantage of
low cost, in personal stereo plaYeys. The cost advantagetites through the offer
of a globally standardized product'Kony’s Walkman fs} global product, offered
all over the world, ignoring differentiatign. In other Words, in this product, Sony
sells the same thing, the same. way, all overthe Wolld, The high quality and low
cost of Walkman attracts customers the woRt@over, Sony is able to combine
economy and high qudlity, by: simultahgously ‘achieving, high volume and
standardization at a high quality leh has built'« competitive advantoge
through this edge. = :
Caterpillar: Caterpillar has bila competitive advantage’in its business’ of
after-sales service. Caterpitng assures its
arth moving equipment ‘trot
casters th i wll teary service requirement and spare patie
any part of the world, it iin 48 hours. This is a far superiot offer compared to
its competitors.
SIGNIFICANCR¢(® COMPETITIVE ADVANTAGE
Ek up forthe strategy
fr es ‘backup forthe strategy. It is the ft between the
firm and the strategy it empldys. ~
a} ris closely linked to strategy. Infact the tw
firm eannot have one.without the other.
is a vital component of firm's strategy.
© satay ta workive must hae relevant CA
A, a firm cannot put into pli
.go hand in hand'and
STD! For strategy ta work we mi
‘© Without the relevant
° Evatt most nicely formulated strategy would fil when the firm
Incks the C.A. required to make the strategy Ee S
© Stiategy aiid'CA are related to one another, 4 el aie
‘without the other. Through en effective stteBy *
and by putting CA into use the firm operates its
1 aan
lace the chosen
inndt have one
CA ‘ae pnafYTM)SEM-Vl_FSM [UNTE3]
| In the absence of CA, corporate objectives Wwouikl remzin elusive
i and strategies would remair hollow
| co Ina compelitive market, all firms do have some strate
j wher The scene eigy ix always wives ‘around the CA of
| © Scoring over compettion as well.cs defending against the
competition would depend on a solid and substantial CA. In
| pursuing opportunities as well as in deflecting threats and
‘vulnerability, the firm banks on CA =.
| © In short, {CA is the heart of strat;
| 3. CA is distinct from strength
© A strength is not necessarily a C:
| condition for a CA. =
| © Only a strength that is superior or distigétive relative
| | ‘competition car be CA See
| | fo It results and manifest itself either as ‘¢e%t ad
| | differelstiation advantage for the firm. <- +
i © Every strength “neéd7not necessarily result in a cost or
differentiation advantage. That is Shy’ every. strength does not
y or the
«>
A, it is necessary but no¥ Sufficient
age or a
vee necessarily mean CA. Atthesame time, the business unit too, developsits own CA.
‘© The latter would often be unique to the particular business, tinay also
be useful to the corporation as a whole.
petitive advantage
6. Core skills of the corporation serve as.anchor for ¢
duilding: ce ;
‘© Usually a firm builds its major CA around its core skills.
© Such CA which are built around the core skills usually prove t9 be
enduring. a
‘© Whether a core skill of the corperation turns out into a full Nedge core
competence or not; it does serve as the anchor for CA building. 4" BBA
Corporate strategy buil a
‘ate strategy built on this
purparate anchor carinot be replicated casily by
y Lie differents
‘ nl any function
5 Integration
De-integration/outs i
ee sourcing
Ss
3
°
°
°
o Supply chain expertise (lower input costs)
o Strength in marketing channe!s
o Mergers and acquisitions
© Strategic alliances
© Creation of entry barriers
o Product differentiation
o Brand dominance
CEONCEPT OF CORE COMPETENCE
"A company's core competence is something the orgasiz
__ especially well in comparison to its competitors.
“A core competence represents a competitive advantage
ss company acquires expertise that competitors do not have.
| 4 A core competence may be in the area of superior research
' developrses’, wrsclon by
-xcepuonal customer service 3
i The cor Sept: sometimes misunderstood 08.
i x perspective that rest 's the numbers of businesses @ ‘company can be in.
| Firms wrongly assume tilat when. they adopt the concept of mre
| competence, it compiz em to remcin with a single business.
1 “+ Jn reality the gompetence perspective helps the firm ‘o operate @
\ number of businesses by having one core skill.
sinegges Will have @ linkage to the core skill. And, with two or
; large besket of business.
+ The § :
three core” skills, a firm can have a very
Examples of Gore Competence: : ‘
= Sony; Capability for miniaturization; it can Make any product tiny.
» Philips: Optical media expertise. = i
rs Capability for making Substrates, Coatings and ‘adhesives and
in multiple ways :
raking engines, which Gives it advantage in
Jawn-owners and Generators
Pan
cos" combining tt
= Honda: Capability for mal
diverse products like cars, storcycles,
= Dupont: Unique strengtn in chemical technology
= JIT: Unique stren ath in electronics
= NEC: nique agcoath in telecom, semi-Conductors and computing soi
\
| ese aee, imaging and micropro
1 «Canon: Unique strength in optics, imaging a” cco
| microprocessor control \ozether, they lend Canon a ‘antege i”
: Giverse product as COPIES: 1, camer, «5
————
\ = ™
4th BBA(ITMJSEM-VIL_ESM (UNO 3) arcana
al
Attributes of Core Competence,
Core competencs is fundamental, unique and inimitable sirengis of the
firm that
i. Provides the firm, the access to a variety of products/hnarkets.
ii, Contributes significantly to customer benefits in the end products.
Is an exclusive preserve of the firm and cannot be imitated easily
by competitors.
Core competence is largely a technological competence, a competence at
the root technology in particular, This is because new businesses/new
products are largely the result of tennclony) This is especially, true in
today’s technoiogy-driven world, wheré~ technology is fast altering
' existing boundaries of businesses. The core competencies of these
corporations are the outcome of their command over seyeral overarching
|
|
technologies. icy
| |
i |
i
i
2
3. Corporations who enjoy a core cer:
process / expertise keep gaining lasting advantage,
proprietary products and fresh value enhancement.
4, In particular, for firms playing the busifiess game through the product
route, core competence is very essential. Often, command over multiple
tele- |
through new and
ing. technologies, (e.g,
interrelated and overarc
composite area, giving ri any-nique pi
5, Core competence. is a knowlédge base, whic!
products with widely varying product missions. Core competency Idea
does not restrict the number of Businesses.
osy IFFERENCE BETWEEN‘COMPETITIVE AD’
h gives rise to a variety of
WANTAGE AND CORE
COMPETENCE. : :
“SC [POINTS OP] COMPETITIVE co CORE COMPETENCE
\ | DIFFERENCE ¢.." | ADVANTAGE.
MEANING >>" (CA. means superior, | CC mean fundamental,
eo “ distinctive competence in| unique & inimitable
< snore related areas to. the | strength of the firm.
~ coe TETCE does imply ©
imply on joe: a cA,
el IMPne CA does not imply Be foe ey ee
SICCESS Gk does not constitote a[CC usually does
: | gure success formula of | constitute sure success
» formula
the firm :
BTITT it finn in
E CA provides compeiitive|CC_ helps aI
y Coe Sok in a given period vasetyof post
0 ily imit cannol
IMITATION Teean be easly tated [1 cannot cain |
A F Fes at the root ofthe} |
GA Ties at the root of the [CC lies at |
{ROooT dl =
: oo es firm’s a
different | businese ode
EH ae as sah
——_|finetonsactvtestador | on |
|
Sony: CA-Low Cos, |S
t, | Se
Sales at same thing in ‘ony: Ce
Microprocessor, uli
|
same way, | thi
Standardization at igh :
: level
zg BEQUIRING CORE COMPETENCE
C/ &b The abili ari
e ability of firms to track and exploit the technological trajeete
in imitating them. The notion of firm specific compete
increasingly influential.amongst economists trying to. explain why firms
are different, atid Row they change over time and alfo ‘amongst business
praClitioners and consultants trying to.idéatify Ae eases of competitive
success> is y
ab In the 1990s, management began to shift interést from improvements in
short term operational efficiency and. Sexbility (through de lyering,
downsizing, outsourcing arid busings<:process re-engineering etc.) to =
conver that. if taken’ too far the corporation could become the
ot eee
in businesses to adapt qu) ickly to changing oO hich oe
¥ ‘com encies feed into more than ODe.