Market Driven Organization

Market Orientation:

Superior skills of organization in understanding and satisfying

customers

Set of beliefs that puts customers’ interests first

Ability of organization to generate and use superior information

about customers and competition

Interfunctional co-ordination for the creation of superior customer

value

Capabilities:

Combination of skills and learning

exercised through organizational

processes and ensure superior co-ordination of

functional activities

Link between capabilities and strategy

Market driven organizations superior in

market sensing and customer linking

Applying capabilities approach to design

programs to enhance market orientation

Capabilities and Strategy:

Capabilities Approach: Best way to determine and improve firm-specific resources

Porter – Differentiate and make strategic investments, pricing strategies etc.

Embedded in organizational culture. Cannot be imitated

Cannot be given a monetary value

Capabilities: Using assets more advantageously

Core competencies:

Distinctive capabilities necessary to move products and services through value chain

They must provide a significant contribution to customer value

Importance vs Performance trade-off

• Customer not aware of processes

How to use capabilities?

Orient outside-in and inside-out processes through spanning processes

Market Sensing as a Distinctive Capability:

Customer Orientation

Competitor Orientation

Interfunctional co-ordination

Customer Linking as a Distinctive Capability:

Particularly in B2B

Starts with co-ordination of inside out and spanning capabilities

Close communication and joint problem solving

Eg: Toyota and manufacturers, Walmart and P&G

Examples:

Walmart – Cross-docking Facility

Marriott Hotels Eye for Detail (66 steps)

Honda: Engine Technology and Dealer

Management

• Difficulty in observing capabilities

• Knowledge tacit and dispersed

• Technical expertise and learning

• Imitation difficult: Result of constant learning and difficult to observe over many functional areas