A core competency refers to unique capabilities that give an organization competitive advantage over its competitors. These capabilities are vital in any organization because its gives the business the chance to grow more than its competitors. Competitive advantage refers to an advantage that an organization gets over its business competitors. This advantage is gained by offering its consumers goods and services that are of a greater value than its competitors or by offering lower prices than them. They can also achieve this by offering greater benefits for goods and services that justify the increase in price of the good. Competitive advantage strengthens the position of the organization in the business environment. Because senior management is not always able to concentrate on every aspect o the business, the managers focus on the core competencies that influence their competitive advantage
A core competence adds value to an organization. It helps business administrators to focus on the areas in a business that really matter because they directly affect the consumers. Core competence also helps staff to gain expertise in areas that will help the organization to grow. Core competence gives an organization uniqueness that makes it stand out over its competitors. This strengthens the position of the business in the market.
An example of an organization that has successfully incorporated Core competence in their system and reaped the benefits is Wal-Mart and Saga. Saga is a leading supplier of financial services the older generation that has applied core competency successfully. The unique attribute that helps it to excel is its clear and distinct brand scheme that centers its activities solely on a consumer group that is closely-defined. Wal-Mart, on the other hand, centers its competitive core competence in its superior logistics system. These two success stories prove that core competencies take organizations to the next higher level than their competitors. Core competency is, therefore, the best move an organization can deploy to ensure success and profitability.
II. The Core Competence of the Corporation.
Core competence represents the uniqueness of an organization that gives it a competitive advantage over its competitors in the business market. Core competence can be in the form of IT and subject matter knows how, a good consumer- supplier relationship, a reliable production system or a distinct consumer group among other aspects. This adds to the value of the organization as well as increase the consumer benefit and satisfaction. These benefits can be in the form of reduced prices or higher quality products with more benefits as compared to their competitors. This makes the organization a favorite for the consumers adding to its profitability. However, it is always that core competence results in competitive advantage. This is because of the other organizational factors as well as the factors of production that might influence the commodities produced by an organization.
Core competencies represent the things that an organization can do better than their competitors especially in the critical and central areas of the company. They are the unique values that make an organization stand out in the market. These core competencies are critical in the long-term growth of the organization. Some of the big organizations in the world that have successfully implemented core competencies are Wal-Mart and Saga among others. These two companies attribute their success to the uniqueness they posses making them better than their competition. Wal-Mart, for example, posses a unique logistics system while Saga has a unique and distinct consumer group. These are examples of core competencies.
A core competence has three key attributes. One of them is that it is never easy to copy or imitate the competency of one organization and implement it in another organization. Also, managers can easily leverage it to cover a wide array of products and markets and finally, a core competence must benefit the consumer in one way or another. A core competence is not limited to one form. It can, therefore, take up the form of product development; subject matter and technical know how, a reliable process and a good consumer- supplier relationship. In addition to this, a core competence must be easy to implement in the business process. This means that it must correspond to the underlying systems, skills, functions and knowledge in the organization. Because senior management is not always able to concentrate on every aspect o the business, the managers focus on the core competencies that influence their competitive advantage.
Strategy entails choosing a criterion that is used by buyers in the business market. Then, the business positions itself uniquely to meet the chosen criteria. This gives the business competitive advantage over its competitors. Competitive advantage gives the business a chance to grow at a faster rate than its competitors. Strategic capability refers to the capacity a business has to prosper, survive and remain valuable in future. Core competency is therefore necessary to ensure the growth and survival of a business strategic capability comprises of a number of definite components. There must be clarity of thinking and actions for strategic capability to apply. Evidence of a strategy to action and progress in operations as a result is also a key component. A strategy capability is also sensitive to the future requirements of the organization, future trends and the consumers. Finally, the strategy comprises of an approach to social, environmental and ethical matters that are an integral part of the business. Therefore, strategic capability can be defined as high-level routine, competence and resources that are crucial in creating and sustaining a competitive advantage .
In the case of James Dyson, he was an entrepreneur who was willing to take chances with innovations. He designed a vacuum cleaner because he was tired of the old fashioned model that was ineffective. However, most manufacturers rejected his prototype for fear of introducing new technology into their organizations. This marked the beginning of one of the best vacuum cleaners manufacturers. Dyson had a unique ability which enabled him to build one innovation after another. It is this uniqueness that has led to the success of hi organization. To date, Dyson together with his colleagues at DAL continually develop innovations in order to maintain a competitive advantage over their competitors. This uniqueness and the ability to create high-quality products that benefit the consumer is what are referred to as core competency. The production teams at DAL have the ability to stand out in the market. The innovations they make benefit the consumers hence justifying the cost. This gives them a competitive advantage over the other vacuum manufacturing companies.
Renault Car Company has also managed to stand out in the business world as a result of improving its core competencies. Renault has over the years been intensifying its activities into other global markets by improving its core competencies. It is argued that if Renault Company had not found a new business partner, it could not have survived when faced with global competition. Both companies agreed to partner because they had a reciprocal interest in each other. This was as a result of cross the shareholding the two companies had. Because of the alliance Nissan and Renault companies had, the two were able to combine their core competencies. This means that the innovative style and cost effectiveness of Renault was combined with the high-quality standards and high technology from Nissan. This way, both companies were able to grow and gain competitive advantage in the Automobile industry. However, sometimes core competency is not all it takes to make a company successful. There are other aspects that contribute for example the skills of the staff, the commitment of the administration towards attaining the organizations targets and environmental aspects among other factors. For example, Renault as an individual company was on the bleak of collapsing. This was despite its core competencies where it was prided to posses’ innovative style and cost effective automobiles. This did not stop the company from almost failing until it got into an alliance with Nissan Company. However, these are just a few exceptions.
III. How capabilities and competence are successfully deployed to give organization competitive advantage
Competitive advantage refers to the advantages a business may have over its competitors in the market allowing it to gain the upper hand in business. The ability of a company to outperform its rivals distinguishes these companies from the rest. This advantage must be sustainable and not a flux of luck for them to be recognized as competitive advantage. Sustainable competitive advantage is thus mandatory in establishing a long-term effect. This depends on how aggressive the competitors are, the product life cycles, the rate of technological advancement, the time available to develop new skills and competencies and finally the time available to create other brands and other advantages. Core competence emphasizes competitive advantage. This is the reason why companies commit their resources to creating competence. When looking at strategic capabilities, it’s important to consider the types of capabilities available. These are; Innovation (products and processes), Quality control (leading to product reliability), Sensitivity (to customer requirements), Speed of reaction (to requirements) and Communication (to build reputation). Examples of strategic capabilities include: Innovations, Reliability, Sensitivity and speed of reaction. All these factors combine to give an organization competitive advantage in the business market.
An example of an organization that has had its core competencies that have successfully obtained competitive advantage is Dyson Company . The company thrived as a result of innovations and the availability of a determined team of experts. The company aims at creating commercial technology that and devices that are easier to use and maintain. This specialization also adds to its ore competency. The company exercises creativity, resourcefulness, enthusiasm, collaboration and practicality in creating their products. A company’s core competence can be defined as the engines that drive the company to success. This engine needs constant recognition as they are valuable assets that make the company attain competitive advantage in the business market. The core competency at DAL is product design. In addition to this, the innovative designs proceed in the company have enabled the company to rise in the market and at the same time command a premium price for its commodities.
Another company that has successfully managed to implement its core competency is the Microsoft Corporation. The corporation is one of the few that recognize the value of core competency. In fact, Microsoft has a website where they provide a guide to earning competency for their business partners. Microsoft believes that core competency would help business partners to effectively differentiate their skills and abilities as well as their expertise to consumers. This way, they would be able to widen their market as well as align Microsoft marketing initiatives with their own. By using this line concept of core competency, Microsoft is able to harmonize its activities and objectives with its business partners. This is the unique aspect about Microsoft that helps it to gain a competitive advantage over its competitors in the market.
Canon Company has strategies that balance the growth of the market share with profitability. The company, however, has several strategic challenges. The key challenge for them was how to identify the best market category to compete in and develop its competitive advantage. Over the years, the company has become a leader in the imaging industry. The business strategic planning centered in identifying markets that had the potential to grow in the future. In the late 1960s, Canon had its core competencies as fine optical and electronics. However, these were insufficient in ensuring the company got a competitive advantage. This forced the company to acquire or develop other additional competencies in communications, materials technology and printing. These competencies were needed in the market to compete successfully. This means that, sometimes the core competencies of an organization are not sufficient enough to ensure they obtain a competitive advantage over their competitors. This means that such companies need to develop other competencies to complement the already existing ones for the sake of competitive advantage.
The Sony Company has over the years been a great corporation that has enjoyed years of prosperity due to its superior brand name. However, this has been short lived as the value of the company has been declining over time. The main reason for the dilapidated profit is the serious strategic issues that are being faced by Sony. This has become a major setback for them as a company. Inefficient manufacturing machines have led to a decrease in the quality of Sony products. This has badly tinted their once good reputation globally. The company’s failure to effectively sustain an effective manufacturing system and to implement Kaizen has damaged the good name Sony had in the world market. This has caused them to lose their competitive advantage in the business market. Reputation is one of the most vital intangible resources organization posses, therefore, when Sony’s reputation became tainted, the consumers lost faith in the company’s products. The diminishing reputation Sony has acquired has created negative prejudice in the public eye as well as weakened the core competencies of the company. This has resulted in the company losing its competitive advantage in the global market hence, threatening the existence of the organization.
In addition to these, Sony Company has proved inefficient in responding to the changing market demand. This has also contributed to the company losing its competitive advantage. Sony has become incapable of fulfilling the rising market demands causing consumers to lose their trust in the company. As a result, the company has lost its competitive advantage as well as a large chunk of the market shares in the industry. In order to regain its previous glory and good reputation of stylish, innovative and superior quality products, the company has to implement effective strategies into the organization's system .
All the above companies prove that core competency does not always entail a competitive advantage in an organization. There are many factors that also play a part in the growth and development of a company. Some of these factors include the skills the staff posses, the resources available, the effectiveness of the management team and the effectiveness of the strategies in the organization.
IV) Bowman’s strategy clock in Dyson and 2 other companies ( Renault and Canon contexts
The strategy clock was based on the work of Cliff Bowman. The purpose of this strategy is to analyze the competitive position of a company in comparison to what the competitors are offering. Bowman considered competitive advantage in connection with product differentiation or cost advantage. The strategy attempts to explain how an organization selling similar products with its competitors can gain competitive advantage. There are eight main strategic options in Bowman’s strategy based on the price and value. The Bowman's Strategy Clock is used to help potential business owners to understand how different companies compete in the business world. It considers the different combinations of price and perceived value These were;
Position 1: Low Price/Low Value
This option is unpopular among companies. It is a position that companies have to be in when they are dealing in products that lack differential value. The products in this category are of an inferior nature bur since the prices are low; consumers are willing to try them.
Position 2: Low Price
Companies in this option are low-cost leaders. These companies drive the prices of commodities down and they tend to balance their low margins with high volumes.
Position 3: Hybrid (moderate price/moderate differentiation)
Hybrids offer commodities at low costs but the products they offer have a higher perceived value than the other low cost competitors do.
Position 4: Differentiation
These companies offer their consumers commodities of high-perceived value. In order to achieve this, they increase their prices hence maintaining higher margins or they lower their prices in order to seek a greater market share.
Position 5: Focused Differentiation
The competitors in this option deal in designer products. Their commodities have a high-perceived value and are usually sold at high prices. The buyers in this category make their purchases based entirely on the perception of value.
Position 6: Increased Price/Standard Product
These companies increase the price of their commodities without necessarily improving the value of their products. If the consumers accept the price change, the companies are able to enjoy high profitability.
Position 7: High Price/Low Value
In this category of competing companies, the companies practice monopoly pricing. Here, one company dominates the market. Thus, such companies mostly do not bother adding value to their commodities because they are the only suppliers.
Position 8: Low Value/Standard Price
Companies in this category usually lose their market share. This occurs mostly in low-value products that can only be sold on price.
At DAL, the management had to decide on the competing position they preferred. Dyson believed that combining design and manufacturing was more significant than focusing on the design itself. The company stores its differentiated products in patents for protection. The company further has 11 separate patents in each discipline of the company. In order to understand the corporate strategy of DAL, the Bowman’s Strategy Clock is applied. According to Bowman’s strategy clock, an organization has the ability to differentiate between low- price strategies, differentiation strategies and risk strategies. Each of them is further divided into segments .
Competitive advantage gives the business a chance to grow at a faster rate than its competitors do. Competitive advantage can thus be defined as the advantage a business gains over its competitors by offering its consumers commodities of greater value. Competitive advantage is gained through attributes and resources that allow the company to perform better than others in the same market or industry. The successful implementation of strategies lifts a firm to superior performance. This is done by helping the firm to attain competitive advantage in order to out perform the current and future players in the market. A business has to learn how to manipulate the available resources in order to generate competitive superior performance outcomes and supremacy in the production of resources is the ultimate sign of competitive advantage .
It is human nature for one to gravitate to what they are good at doing. For example, the best cook in most cases makes the family meal while the one good at repairing things will most likely be inclined to fix the squeaky door. Likewise, in an organization, they gravitate towards what they are good at doing. However, in an organization, it is done in a formal way. Businesses take on a careful approach to discovering and defining their core competencies. Once this is achieved, they single-minded pursue them to achieve maximally. By limiting the areas of focus, organization administration is able to channel all the resources available for maximum output.