capabilities and competencies – core competencies

8/4/2019 CAPABILITIES AND COMPETENCIES – CORE COMPETENCIES

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CAPABILITIES AND COMPETENCIES

►

Capability-based strategies are based on thenotion that internal resources and core

competencies derived from distinctive

capabilities provide the strategy platformthat underlies a firm's long-term

profitability.

► Evaluation of these capabilities begins witha company capability profile, which

examines a company's strengths and

weaknesses in four key areas:



► Managerial

► Marketing

► Financial► Technical

Then a SWOT analysis is carried out to determine

whether the company has the strengthsnecessary to deal with the specific forces in theexternal environment. This analysis enablesmanagers to identify:

► external threats and opportunities, and

► distinct competencies that can ward off thethreats and compensate for weaknesses.



►Capability-based strategies, sometimes referred toas the resource-based view of the firm, are

determined by:► (a) those internal resources and capabilities that

provide the platform for the firm's strategy and

► (b) those resources and capabilities that are theprimary source of profit for the firm. A keymanagement function is to identify what resourcegaps need to be filled in order to maintain a

competitive edge where these capabilities arerequired. Several levels can be established indefining the firm's overall strategy platform (seefigure).



►At the bottom of the pyramid are the basic

resources a firm has compiled over time. They

can be categorized as technical factors,competitive factors, managerial factors, and

financial factors.

►Core competencies can be defined as the uniquecombination of the resources and experiences of

a particular firm. It takes time to build these core

competencies and they are difficult to imitate.Critical to sustaining these core competencies are

their:



► Durability - their life span is longer than

individual product or technology life-cycles, as

are the life spans of resources used to generatethem, including people.

► In transparency - it is difficult for competitors

to imitate these competencies quickly.► Immobility - these capabilities and resources

are difficult to transfer.



CORE COMPETENCIES.

►Core competencies are those capabilities that arecritical to a business achieving competitive

advantage.

►The starting point for analyzing corecompetencies is recognizing that competition

between businesses is as much a race for

competence mastery as it is for market positionand market power.



►Senior management cannot focus on all

activities of a business and the competencies

required to undertake them. So the goal is formanagement to focus attention on

competencies that really affect competitive

advantage.

►Core Competencies are not seen as being fixed .

►Core Competencies should change in response to

changes in the company's environment. They are

flexible and evolve over time.



►What is Core Competency?

►Core competency is a unique skill or technology

that creates distinct customer value.►As an organization grows, develops and adjusts to

the new environment, so do its core competencies

also adjust and change.►core competencies are flexible and developing with

time. They do not remain rigid and fixed.

►The organization can make maximum utilization of the given resources and relate them to new

opportunities thrown by the environment.



►Resources and capabilities are the building

blocks upon which an organization create and

execute value-adding strategy so that anorganization can earn reasonable returns and

achieve strategic competitiveness.

►

Resources are inputs to a firm in theproduction process.

►These can be human, financial,

technological, physical or organizational.►The more unique, valuable and firm

specialized the resources are, the morepossibly the firm will have core competency



►Resources should be used to build on the strengthsand remove the firm’s weaknesses. Capabilities

refer to organizational skills at integrating it’steam of resources so that they can be used moreefficiently and effectively.

►Organizational capabilities are generally a result of

organizational system, processes and controlmechanisms.

►These are intangible in nature. It might be that a

firm has unique and valuable resources, but if itlacks the capability to utilize those resourcesproductively and effectively, then the firm cannotcreate core competency.



►The organizational strategies may develop new

resources and capabilities or it might make

stronger the existing resources and capabilities,hence building the core competencies of the

organization .

►Core competencies help an organization todistinguish its products from it’s rivals as well as

to reduce its costs than its competitors and

thereby attain a competitive advantage. It helps

in creating customer value .



►Core competencies give way to

innovations. Using core competencies, new

technologies can be developed.

► They ensure delivery of quality products

and services to the clients.

►These decide the features and structure of

global competitive organization.

capabilities and competencies – core competencies

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