Strategic Management and Business Policy

Core Competency and Distinctive Competency

Core Competency: A core competency is defined as the capital and capacity that defines the competitive advantage a company has over its competitors over time. Core competency is used to portray the personality and is drawn from the capabilities of the company. Examples of core competencies in other firms would be how Sony prides itself in producing and assembling small and miniature sized electronic appliances. A core competency must be valuable, uncommon, inimitable and organized. A value chain analysis assists a company in making an evaluation of overheads and activities that are centered towards delivering value to its clients.

In a study (Alston, 2004) concludes that distinctive competency is described as a set of unique capabilities an organization may possess that facilitates it to undertake or capture a bigger piece of the market share, in comparison to its business rivals. This capacity may well be in the form of technological resources, human resources, or other means of capital. Generally it is what the company is entailed to do in order to beat its competition. For an organization to identify its distinctive competency the administration has to examine both its internal and external business situation. It is obliged to do an accurate evaluation of its business activity, services and product delivery. Subsequent to this evaluation, the organization should be capable to recognize its strengths that are able to satisfy the demands of the market and give the organization its leading edge. These strengths are the organization’s distinctive competency. With this data, the organization should utilize it to, constantly be at the forefront of the competition. It is critical data for the continued growth of any organization in the specific market that they operate.

Gaining distinctive competencies

  • In his book (Hill, 2009) states that the organization can employ more competent specialists than its competitors. This will translate in the organization comprising of more experienced professionals than its business rivals.
  • The organization can also make a decision to get hold of or venture into unexploited markets. This will lead to an expansion of its market share. This ensures that the organization is better placed to take advantage of both visible and invisible opportunities.
  • The organization can conjure other inventive methods of marketing. This can apply to both products and services so as to give it enough room to research and develop on new ideas.
  • By integrating an improved management formation that would make certain enhanced delivery of the products or the services the organization delivers.
  • A company can also gain distinctive competency by producing high quality products that beat the quality that is being offered by its competitors. All these should be done with no compromise to the price charged to the consumer.
  • The company can expand its technological ability by inculcating a culture of innovativeness by implementing research and developing its products or services
  • There are some organizations that gain distinctive competency by reducing the production expenditures.
  • By developing better and more friendly customer support services
  • The organization may possibly establish a new product or service that may interest the existing market.
  • The organization can also market in the best imaginative or novel way.
  • It can also decide to transfer to a tactical locality that can enable the business have access to bigger markets.

Numerous business policies are adapted on good distinctive competence. For a business to succeed, it ought to constantly maintain a leading edge over its competitors. In his research (Griffin, 2006) concludes that for any business organization with extra distinctive competence, the intensity of rivalry over its competitors is more as the organization operates at a better level than others. Distinctive competencies enable it to pursue a different course from that of its competitors therefore granting independence to the business. This allows the business the ability of venturing into new schemes that the competitors will find very hard to emulate.

Examples of case studies of Real Life Firms

Apple computers pride themselves with being with one of the most innovative computer and phone products. There biggest competition over the years has been Microsoft and IBM. In the 1980’s the distinctive competence of apple was the fact that the Apple 2 was an affordable and expandable home computer and the apple Macintosh was used by professionals compared to the IBM pc. Apple also explored a new untapped market of colleges and college students. They also marketed the apple 2 to home users.

In 1991 apple produced the PowerBook. This shows the distinctive competence of coming up with new innovative products that suite the market. Other companies like IBM were made to follow this design developed by Apple.

They used the internet to sell the different computers that they had. This shows that the company was innovative and they embraced technology to enhance their business.

Steve Jobs stepped back as the CEO and apple to the present day is a blue chip company. This shows that a strategic change in management was the distinctive competence of the company. With Steve Jobs in the reign, it has made apple’s profit margin to soar. With an increased financial base from 2004 apple decided to start experimenting with new parts from different suppliers and this made the company able to develop new products over a short period of time. This leads to the development of new better products like the iPhone and the iPad. This shows that the company has a distinctive competency factor of being innovative in terms of product development.

Another example of a firm that has been able to keep ahead over its competitors is Harley Davidson. Harley Davidson is known to gain distinctive competencies by concentrating on:

  • Value chain activities that may be considered core competencies for H-D include: Inventory management and order processing, whereby the company strictly organize the inventory in its plants using the just in time policy. In this policy a request for an inventory part is passed through a signal in the form of a ticket and a reply through the provision of the requested part is made. This removes the overproduction of certain parts and ensures that the quality of the motorbike is sustained. It also improves on the company’s return on investment as it also saves on costs such as warehousing.
  • Marketing and sales: Harley Davidson is known worldwide due to its successful marketing campaigns that they have done from the past. Adverts of the motorcycles have been done by creating a retro appeal whereby the machines being assembled to have the look and feel of motorcycles assembled during the war time. This has created and exploited brand loyalty among its customers. Through its marketing efforts the Harley Davidson brand is being compared to others such as Google and Microsoft.
  • Services: Harley Davidson is known to offer technical support through its large network of dealers all over the world. This creates a direct connection for the company to its customers and it also gives them a form of communication whereby the customers can voice their concerns which can be easily be picked up by the company. The company also does repairs and maintenance for Harley Davidson customers and this ensures that value is created to its customers.
  • Research and Development: H-D is known for pushing the envelope when it comes to innovation of its motorbikes. The staff at the company has always come up with several inventions of different engines such as the famous V twin engine and the V-Rod which was invented with the help of engineers from other firms such as Porsche. Research and development is not limited to the bikes assembled but also to the production and distribution processes.
  • Regulatory Affairs: H-D is known for its strict compliance to environmental policies to meet standards set out by the various environmental bodies such as the EPA and European Union. In 2005, the company was the first to register in the one cleanup program which was meant to clear out any forms of waste that affected both the soils and ground water at its former plant in Pennsylvania. Its efforts have been congratulated and recognized by the EPA director of operations.

Challenges

The two examples cited above have endured a number of challenges in the form of the increasing number of counterfeit products and services. As technology becomes cheaper, the competitors of the two firms are finding ways in which they can produce counterfeit products of the two firms, hence reducing the brand image of the two firms. Another present challenge is the current recession that the world underwent. This reduced the purchasing power of consumers hence reducing the distinctive competencies.

Reference List

Alston, F. (2004) Creating and implementing your strategic plan. London, Oxford Publishers.

Griffin, W. (2006) Management. New York, Cengage Learning, 2006.

Hill, C. (2009) Strategic Management Theory: An Integrated Approach. New York, Cengage Learning.

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