1. COMPETENCIES AND CAPABILITIES OF A FIRM

2. FIRM’S COMPETENCIES AND CAPABILITIES
Competence is something a firm can do well.
Competence is acquired through experience which is accumulation of learning and build up of proficiency in performing an activity
Prof.Bijay KC, Ph.D., SAIM

3. CORE COMPETENCIES AND CAPABILITIES
Something a firm does well relatively to other internal activities and such activity is central to the firm’s strategy and competitiveness.
Very Valuable for the firm lying at the core
Core competency lies in the firm’s people, not in the assets of its balance sheet
Prof.Bijay KC, Ph.D., SAIM

4. DISTINCTIVE COMPETENCE
Competence that helps firm to perform better than its rivals
It is a basis for gaining competitive advantage over its rivals
Core competence may be in the form of high quality product/service, timely delivery, easy access etc.
Prof.Bijay KC, Ph.D., SAIM

5. THE ROOTS OF COMPETITIVE ADVANTAGES
End Products 1 2 3 4 5 6 7 8 9 10 11 12
Business 1
Business 2
Business 3
Business 4
Core Product 2
Core Product 1
Competence 2
Competence 3
Competence 4
Competence 1
Prof.Bijay KC, Ph.D., SAIM

6. THE ROOTS OF COMPETITIVE ADVANTAGES HONDA
End Products 1 2 3 4 5 6 7 8 9 10 11 12
Lawn Mowers
Power Generators
Four Wheelers
Two Wheelers
Vehicles
Generators
Engine Designing
Power trains Designing
Prof.Bijay KC, Ph.D., SAIM

7. Core Competencies of some companies
Companies Products Core Competencies
3 Ms Post it note Adhesives, sticky tapes
Magnetic tape competence to use
Coated abrasives
Honda Motor cycles, cars Engines and power
Lawn mowers trains
Generators
Canon Copier, laser Optics imaging and
printers microprocessors
Cameras image
scanners
Prof.Bijay KC, Ph.D., SAIM

8. IDENTIFYING CORE COMPETENCIES
Three tests to identify core competencies:
Core competence provides potential access to a wide variety of markets.
Core competence should make a significant contribution to the perceived customer benefits of the end product.
Core competence should be difficult for competitors to imitate.
A list of 20/30 capabilities indicate a firm has no competencies
Prof.Bijay KC, Ph.D., SAIM

9. LOSING CORE COMPETENCIES
Companies lose core competencies when
They undercut internal investment
Forego opportunities to establish competencies that are evolving in the existing business
Prof.Bijay KC, Ph.D., SAIM

10. SUSTAINBILITY OF CORE COMPETENCE
1.Durability: the rate at which a firm’s resources and competencies depreciate or become obsolete and irrelevant 2. Imitability: the rate at which a firm’s resources and competencies can be imitated by others
Prof.Bijay KC, Ph.D., SAIM

11. A core competence can be easily imitated if it is:
Transparent: How quickly other firms can understand the relationship of resources and capabilities supporting the success of a firm’s strategy?
Transferability: How quickly can competitors gather resources and capabilities to support a competitive challenge?
Replicability: How quickly can the competitors use duplicated resources and capabilities
Prof.Bijay KC, Ph.D., SAIM

12. DEVELOPING STRATEGIC ARCHITECTURE
A strategic architecture is a road map of the future that identifies which core competencies to build
Fundamental questions are:
How long can a corporation preserve competitiveness in the existing business if it neglects the particular core competence?
How central is this core competence to perceived consumer benefits?
What future opportunities be foreclosed if the corporation were to lose this particular competence?
Prof.Bijay KC, Ph.D., SAIM

13. DEVELOPING STRATEGIC ARCHITECTURE
Strategic architecture should make resource allocation priorities transparent to the entire organization.
Consistency in resource allocation and
Development of a relevant administrative infrastructure
Prof.Bijay KC, Ph.D., SAIM