Presented by:

Arshdeep Singh

Roll no.- 6805

CORE COMPETENCY

Core competency are the skills, characteristics, and

assets that set your company apart from

competitors. They are the fuel for innovation and

the roots of competitive advantage.

COMPETENCIES DO NOT MEAN:

Outspending competitors on research and

development

Cost sharing among SBU’s

Vertical integration

THE DIVERSIFIED CORPORATION

IDENTIFYING YOUR CORE COMPETENCIES

Compile a list of capabilities.

What do you excel at?

Think of your most skilled employees.

What products have been your past winners?

BE REALISTIC

“ Few companies are likely

to build world leadership in

more than five or six

fundamental competencies”

NOW THE TEST

Does this competence provide potential access to

a wide variety of markets?

Does this competence make a significant

contribution to the perceived customer benefits of

the end product?

Is this competence difficult for competitors to

imitate?

VARIETY OF MARKETS

What do small cars, luxury cars, sports cars have in

common?

They are all the result of MSIL know-how in

miniaturization, microprocessor design, material

science, and ultrathin precision casing.

EASY TO IMITATE?

Maruti is a market leader in car manufacturing in

India. Have you ever seen a Maruti luxury car?

Luxury is not one of MSIL competencies. They

could put one on the market by outsourcing the

design and production.

Would this give them any manufacturing share? Or

just temporary market share?

SO WHAT?

If you don’t know what your core competencies

are, you may spin off a business unit that contains

your most competitive skills, employees, or core

products.

Long term strategy involves constant innovation.

Core competencies provide a market position that

allows a company to influence what products will be

available in the future.

STRATEGIC ARCHITECTURE

A company’s future is

determined by it’s core

competencies. These

competencies define the

architecture and characteristics

of the global competitive firm.

BOUNDARY LESS ORGANIZATION

In the old diversified corporation, ideas and

technologies are reluctantly shared from one SBU

to the next, if at all.

Boundaries seem transparent when SBU’s share

core competencies and core products. These

resources come from the firm.

RESOURCE ALLOCATION

When core competencies are the roots of the firm,

specialized employees and core products can be

allocated to various SBU’s.

At Maruti, specialized employees move between

camera and printer products regularly.

INNOVATION

Using core competencies, new technologies can be

developed without heavy R&D costs. Fiat: Drive your way

Maruti sazuki : Count on us

Hyundai: New thinking new possibilities

Honda: Off-road buggy

Ford: Go further

COMPETENCE BUILDING

The focus of today’s global firm should be in

competence building.

Constantly improving competencies provides for

new integrated technologies.

Competencies provide focus for long-term goals.

COMPETITIVE ADVANTAGE

Short-term market share can be won by anyone

with a good idea.

Race to get products on the shelf.

Long-term success involves competency structured

organizations, innovation, and market consistency.

Same core products, integrated into new end

products, creating new markets.

SBU’S VS. CORE COMPETENCIES

The old concept of the diversified corporation is a

portfolio of strategic business units (SBU’s) within a

similar product or customer category. Each SBU’s

goal is to put competitive products on the shelf

today .

Today’s corporation must maintain competitiveness

by developing core competencies. These

competencies determine the strategic architecture

of the firm. Competencies must translate into core

products, which significantly contribute to the firm’s

end products.

CASE STUDY (MARUTI SUZUKI)

Maruti Suzuki India ltd. is a subsidiary of Suzuki

motor corp., Japan. MSIL has been the leader of

the Indian car market for over two and a half

decades.

Its Core competencies:

1. Their core competencies lies in manufacturing

small cars.

2. Another competency is the fuel efficiency factor

that their car provides.

CONTD…

3. Maruti competency lies also in the fact that they

are priced very effectively.

4. Maruti suzuki’s yet another competency lie in the

fact that the customer trust they are having.

WHY COMPETENCIES?

Even good marketing wont make a “me too” firm

competitive in the long run.

Competencies are enhanced with time.

Make or buy decisions are simplified.

Non-competencies can be supplemented with

strategic alliances and licensing agreements.

SUMMARY

Learn your competencies

Develop your competencies

Structure your organization around your

competencies

Involve core products in all end products

Outsource non-competencies with strategic

alliances and licensing.