final core competency

8/3/2019 Final Core Competency

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The Core Competence

of the Corporation

Omkar Jadhav- MMS 18

Rahul Singh- MMS - 54


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COMPETITION

DIVERSIFICATION

CORE COMPETANCIES


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THE IDEA IN BRIEF

Diversified giant NEC competed in seemingly

disparate businesses

It considered itselfnota collection of strategic

business units, but a portfolio ofcore competencies

Thinking of a diversified company as a tree

Core competencies creates unique, integrated

systems which is difficult for competitors to imitate


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THE IDEA IN PRACTICE


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CLARIFY CORE

COMPETENCIES

ARTICLUATE A STRATEGIC INTENT

IDENTIFY CORE COMPETANCIES

CULTIVATE MINDSET

STOP THINKING BUSINESS ASSACROSANCT

IDENTIFY PEOPLE AND PROJECTS THAT

EMBODY THE CC

BUILD CORE

COMPETENCIES

INVEST IN NEEDED TECHNOLOGIES

FORGE STRATEGIC ALLIANCES


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A Japanese multinational IT company, NECprovides IT and network solutions tobusiness enterprises, communications

services providers and government.

Nippon Electric Company
http://www.nec.com/


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GTE was the largest of the independentUS telephone companies started in 1913

Service: provided local telephone serviceto a large number of areas of the US

In 2000, GTE was bought by Bell Atlantic,renaming itself Verizon Communications.

General Telephone & Electronics Corporation
http://en.wikipedia.org/wiki/GTE


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NEC - Core Competency

NECCommunicationsEquipment

Radio broadcast

Microwavecommunicationstechnology

Semiconductors

1958 Signed atechnology licensing

agreement with GE1960 established itsIntegrated CircuitsDivision

1967 moved into VLSIsComputers

1950 entered thecomputer industry

1974 first Japanesemicroprocessor

1979 developed it first PC


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GTE-Core Business

Sell or transfer underperforming ornon-core businesses

Focus on new and enhancedcommunication businesses

Sold:Television & radio manufacturingoperations

Consumer communication products

GTE Sprint

Worldwide lighting, electronic product,

space-based communications, andaircraft cellular phone business

1990s The merger with ContelCorporation

Agreements with Lycos, Qwest,and Cisco to enhance its position inInternet-related business

Expand to foreign markets


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Performance of NEC vs. GTESales

Sales in Millions of $'s

NEC vs GTE

$-

$10,000

$20,000

$30,000

$40,000

$50,000

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

GTE

NEC


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RETHINKING THE CORPORATION


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1. Diversified corporation - point its business unitsat particular end product markets Dominate

2. Changing market boundaries

3. A few companies have proven themselves adeptat inventing new markets, entering emerging

markets etc

4. The critical task for management is to create anorganization capable of infusing products withfunctionality or products that customers need butnot yet even imagined.

5. Top managements of Western companies mustassume responsibility for competitive decline.


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CORE COMPETANCIE

CORE PRODUCTS

BUSINESS UNITS

END PRODUCTS


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Core Competencies

Core competencies are the collectivelearning in the organization, especially

how to coordinate diverse production skillsand integrate multiple streams oftechnologies.


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1. Core competence is communication, involvement,and a deep commitment to working across

organizational boundaries.

2. The skills of individuals together constitute corecompetence and efforts should not so narrowlyfocused that they cannot recognize the

opportunities for blending their functionalexpertise with those of others in new andinteresting ways.

3. Core competence does not diminish with use.

4. But competencies still need to be nurtured andprotected; knowledge fades if it is not used.


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THE MISTAKES THAT ARE DONE NOW

Top management often tracks the cost and qualityof competitors products

Yet managers fail to untangle the web of alliancestheir competitors have constructed to acquirecompetencies

Looking at the fruit gives a deceptive image ofthe strength of the tree


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Identifying Core Competencies

1. potential access to a wide varieties of

market

2. make a contribution to the perceived

customer benefits of the end product.

3. difficult for competitors to imitate.


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Losing Core Competencies

Outsourcing provides only a short

cut to a competitive product.

Forgoing the opportunities to

establish competencies that are

evolving in the existing business.


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Lessons learned

Cost of losing core competence can

be partly calculated in advance.

A company that has failed to invest

in core competence building will find

it very difficult to enter an emerging

market.


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Core Competencies

Hondas internal

combustion engines
http://images.google.com/imgres?imgurl=http://glassguide.goauto.com.au/mellor/mellor.nsf/0/9BD2C8AB3F126E69CA2572FE000CCF65/$file/Type_R_Front.jpg?OpenElement&imgrefurl=http://glassguide.goauto.com.au/mellor/mellor.nsf/rtmodel?readForm&make=Honda&h=220&w=360&sz=24&hl=en&start=4&sig2=TIjiU0lM26Ymicsc-ytU6w&tbnid=bFiy9JBmIDtv8M:&tbnh=74&tbnw=121&ei=SrqvR_TTFZrWgQO9pJSkAg&prev=/images?q=Honda+car&gbv=2&hl=en&newwindow=1&safe=off&sa=Ghttp://images.google.com/imgres?imgurl=http://bp0.blogger.com/_8qUdeW6ewZ0/RqOB4-MQbZI/AAAAAAAAAFw/EYEJjZpYnP4/s400/Ridgeline_RTX-2.jpg&imgrefurl=http://all-about-4x4.blogspot.com/&h=249&w=400&sz=17&hl=en&start=12&sig2=Q3xV4Fz2h6kz47-PkIx2fw&tbnid=USxTyHvmH4JngM:&tbnh=77&tbnw=124&ei=KbqvR9mBF5vEgQOi3fCeAg&prev=/images?q=Honda+truck&gbv=2&hl=en&newwindow=1&safe=off&sa=Ghttp://images.google.com/imgres?imgurl=http://www.speedwaysales.com/honda/snowblowers/HS928TA.jpg&imgrefurl=http://www.speedwaysales.com/honda/snowblowers.php&h=318&w=300&sz=20&hl=en&start=2&sig2=OGdorU3GoN0wJ8-4g8uFSw&tbnid=rPqp1Icet2o0WM:&tbnh=118&tbnw=111&ei=GrqvR--RJpSWhAP6iKSkAg&prev=/images?q=Honda+snowblower&gbv=2&hl=en&newwindow=1&safe=off&sa=Ghttp://images.google.com/imgres?imgurl=http://www.janssens.on.ca/images/hondapic1.jpg&imgrefurl=http://www.janssens.on.ca/honda/index.php&h=188&w=249&sz=14&hl=en&start=5&sig2=Kd4hSmqMg5XroLaRISotPA&tbnid=GYwBfudL9qIIGM:&tbnh=84&tbnw=111&ei=97mvR9r3AZbwgwPeoLijAg&prev=/images?q=Honda+lawnmower&gbv=2&hl=en&newwindow=1&safe=off&sa=G


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Thinking in terms of core products forces a

company to distinguish between the brand

share it achieves in end product markets

and the manufacturing share it achieves in

any particular core product.


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Product

Example

Core Product( ManufacturingShare)

End Product(Brand Share)

Canon Desktop LaserPrinter-84%

Laser printer-minimum

Matsushita Compressors-40% Air-conditioning &Refrigerator-minimum


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The Tyranny of the SBU

There is a need for new principles in

companies organized exclusively

according to the SBUs.

Two Concepts of the Corporation:

SBU or Core Competence


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SBU Core Competence

Basis for competition Competitiveness of

todays products

Interfirm competition

to build competencies

Corporate structure Portfolio of businessrelated in product-market terms

Portfolio ofcompetencies, coreproducts and business

Status of the business

unit

SBU owns all

resources other thancash

SBU is a potential

reservoir of corecompetencies

Resource allocation Discrete businessesare the unit ofanalysis

Businesses andcompetencies are theunit of analysis

Capital value addedtop management

Optimizing corporatereturns throughcapital allocation,trade offs amongbusiness.

Enunciating strategicarchitecture andbuilding competenciesto secure the future.

Two Concepts of the Corporation: SBU or CoreCompetence


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Diversified Corporations

Portfolio of products, Portfolio of

business, Portfolio of competencies.

Top management should have the

vision to build competencies and the

administrative means for assemblingresources spread across businesses.


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Battle for Global Leadership

Cannot beat rivals in core competence

leadership by mere weight of investment i.e.

building leadership in few technologies.

Can outpace the rivals in new business

development by:

building core competencies,

winning the race to capture world manufacturingshare in core products.


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Difficult to determine if one is winning or

loosing in the end product via market share.

Successful companies build global brand

umbrellas by proliferating products out of their

core competencies.

This help businesses to build image, customer

loyalty and access to distribution channels.


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Developing Strategic

Architecture


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STRATEGIC ARCHITECTURE

It is a roadmap of thefuture that identifieswhich corecompetencies to build

and their consistenttechnologies.


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HOW DOES IT HELP

It provides an impetus for

learning from alliances .

A focus for internal

development.

Reduce the investment needed

to secure future market


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HOW SHOULD A S.A LOOKLIKE

It is different for differentorganization

It can draw idea from thecompetency tree.

It provides a logic for product and

market diversification.


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Resource allocation prioritiestransparent to the entireorganization.

Provides understanding to thelower level managers regardingthe logic of allocation priorities.

Disciplines senior management tomaintain consistency


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It provides a framework to link

technical and production know-how

across SBUs. It will provide

competitive advantage.

It cannot be copied by competitors.


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Every end productoffered by Canon

has at least onecore product thatmakes a

significantcontribution tothe perceived

customer

Real World Example:


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Redeploying to Exploit Competencies

Core competencies need to be

spread across the company.

SBUs should bid for the core

competencies as they bid for

capital.


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Conclusion

Core competency should be the focus of

strategy at corporate level.

Build organization on the hierarchy ofcore competency, core product and end

products

Top management must add value viastrategic architecture.


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THANK YOU

final core competency

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