Business Simulation Seminar Core Competencies and Competitive Advantage

Core Competencies Something that a firm can do well and that meets the following three conditions: 1. It provides consumer benefits 2. It is not easy for competitors to imitate 3. It can be leveraged widely to many products and markets. Gary HamelGary Hamel and C. K. Prahalad in The Core Competence of the Corporation (1990).C. K. Prahalad

Distinctive Competency  A core competency that only a few firms possess  In business, always look for an advantage  A ‘level playing field’ is not a good thing  Examples

Competitive Advantage  A position a firm occupies against its competitors  Comes in two forms: Cost advantage Differentiation advantage  “Sustainable competitive advantage” is position which competitors are not able to duplicate  Examples

Cost Advantage  What data do you look at to see if a business has this?  How can a business take advantage of this?  Does a company in the simulation have this?

Differential Advantage  Can be many areas Product  Features, packaging, terms & conditions Distribution  Can you see this in the simulation? Product features? Distribution? Promotion? Sales? Terms & conditions?  Which are sustainable?

The Big Picture  Succeed with your customers and your profits will be good  Success with customers makes it easier to attract capital  More capital leads to more assets  More assets means you can serve customers better “Competitive Advantage from the Bottom Up,” Daniel Smith, CapSim Inc.