Business Economics And Strategy: Resources, Competences And Firm’s Strategic Capabilities

Business economics and strategy Resources, Competences and Firm’s Strategic Capabilities

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Why talking “competencies”? • Ten years, what a difference make! – 80s: restructure, declutter, delayer the corporation – 90s: identify, cultivate and exploit the core competencies that make growth possible

• Rethinking the Corporation – Why? Market boundaries changer quickly, targets are elusive and value capture is at the best temporary – Need: Invent new markets, enter emerging markets, shift customer choice in established 2 markets

Beyond price/performance • Japanese firms provided a good example – they have been able to generate a blizzard of features and functional enhancements that bring technological sophistication to everyday products

• The return of “long run” – In the short run, a company’s competitiveness derives from the price/performance attributes of current projects

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How competencies support End products products? 1

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Business 1

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Business 2

Core product 1

Core Competence 1

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Business 3

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Business 4

Core product 2

Core Competence 2 Core Competence 3 4

--- is a cross-organizational boundaries culture

• Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies – Sony capacity to… – Philips expertise in…

• Competence is about – Harmonizing streams of technology – Organization of work

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How to think of competence • Successful companies seem to preside over portfolios of unrelated business in terms of customers, distribution channels, and merchandising strategy… • … because they are able to integrate skills • In that context, core competencies provide strategic flexibility (possibility to 6 enter more markets)

From core competences to core products • The tangible link between core competencies and end products is what we call the core products – The physical embodiments of one or more core competencies – Core products are the components or subassemblies that actually contribute that contribute to the value of the end products – Attention to the difference between core 7 competence – core product – end product

Layers of competition • At the level of core competence, the goal should be to build leadership in in the design and the development of a particular class of product functionality • To sustain leadership in their core competence areas, companies seek to maximize their share in core products • They also need to define a strategic architecture – A tree of the corporation organized around 8

Competition for competence • Competition to develop and acquire constituent skills and technologies • Competition to synthesize core competencies • Competition to maximize core product share • Competition to maximize end product share

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Processes, positions and paths • Processes – Integration – Learning – Reconfiguration and transformation

• Positions – Technological assets – Complementary assets – Financial assets

• Paths – Path-dependencies

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Establishing the core competence Market agenda New Core competence Existing

Existing

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