THE CORE COMPETENCE OF THE CORPORATION

Kumar Sourabh Kumar Vikas M Rajiv Naresh Verma Nishant Pagaria Pankaj Kumar Pankaj Srivastava Parimal Sinha Pradeep jain Pramod Shrivastava

Business Policy & Strategy Presented By : Group-3 Roll No : 019 to 028

GTE VS NEC
GTE (USA) NEC (JAPAN)

Early 1980s 1988

* Be active in telecommunications * Smaller * Span a variety of business * No experience in telecommunications

* Become a telephone operating company

* Leader in semiconductors * Succeed in many business

Sales change

* 1980 : $99.80 billion * 1988 : $164.6 billion

* 1980 : $38 billion * 1988 : $218 billion

WHY NEC OUTPACED GTE

Articulate a strategic intent to exploit convergence of computing and communication (C &C) Constituted C&C coordination committee Acquire competencies through alliances Develop core products (semiconductors) Blending of competencies Leader in consumer electronics

CORE COMPETENCE CONCEPT OF CORPORATION

Core competencies are the collective
learning in the organization, especially to coordinate diverse production skill Core competence and integrate multiple streams of technologic. End product by Prahalad & Hamel

Core competence

Spawn unanticipated products (NEC)

Long-term

In the long run ,which can provide more profit for corporation? Short-term

Competitiveness of todays products (GET)

CORE COMPETENCIES!
Even good marketing wont make a me too firm competitive in the long run. Competencies are enhanced with time. Make or buy decisions are simplified. Non-competencies can be supplemented with strategic alliances and licensing agreements.

ROOTS OF COMPETITIVENESS
End products 1 2 3

Fruits & Leaves

Business 1

Business 2

Business 3

Business 4

Business unit Core product2

Branch

Core product1 Trunk

Root

Core
competences Basic technologies 1 2 3 4

HOW TO GET COMPETITIVE ADVANTAGES?

Strategic Architecture
2 1 Identify core

Strategic Steps
3

Strategic Intent

clarify the corporations goals Improving the employees

Exploit the convergence of computing and communication

Competences , Basic technologies and core products

Program strategies according to strategic architecture to create core competencies

Competencies sever for computing, communications and components business Semiconductors

Industry Foresight

need

HOW TO BUILD CORE COMPETENCIES?

Get basic technologies Get licensing deal alliances/acquisitions/r ecruitment Invent oneself Restructure Corporation structure R&D department Location department Leaning organization

Develop Core product

OEM-supply
Leader in core competence Build global brand umbrellas

Enter new business

Strategic Architecture

advantages from core competencies \ brands\ chains \ Capital \reputation

A map of future

IDENTIFYING CORE COMPETENCIES

Provide potential access to a wide variety of market

Make a significant contribution to the perceived customer benefits of the end product

Should be difficult for competitors to imitate.

SUCCEED IN BUSINESS COMPETITION

GTE

Competitiveness advantages
Everything for core competencies

Barrier to build core competencies

Imprisoned resources

Resource arrangement

Different Targets

base on Strategic invent

Invent risk

Base on many advantages

REAL WORLD EXAMPLE:

Every end product offered by Canon has at least one core product that makes a significant contribution to the perceived customer benefits.

SO WHAT?

If you dont know what your core competencies are, you may spin off a business unit that contains your most competitive skills, employees, or core products. Long term strategy involves constant innovation. Core competencies provide a market position that allows a company to influence what products will be available in the future.

Strategic Architecture A companys future is determined by its core

competencies. These competencies define the architecture and characteristics of the global competitive firm.

RESOURCE ALLOCATION
When core competencies are the roots of the firm, specialized employees and core products can be allocated to various SBUs. At Canon, specialized employees move between camera and printer products regularly.

INNOVATION

Using core competencies, new technologies can be developed without heavy R&D costs.
Casio:

Small-screen LCD TV Canon: Personal copier Komatsu: Underwater remote-controlled bulldozer Honda: Off-road buggy Sony: 8mm camcorder

COMPETENCE BUILDING
The focus of todays global firm should be in competence building. Constantly improving competencies provides for new integrated technologies. Competencies provide focus for long-term goals.

COMPETITIVE ADVANTAGE

Short-term market share can be won by anyone with a good idea. Race to get products on the shelf.

Long-term success involves competency structured organizations, innovation, and market consistency. Same core products, integrated into new end products, creating new markets.

RISKS OF IGNORING CORE COMPETENCIES

Opportunities for growth will be needlessly turned down. As a company division lies and fractures into ever smaller business units, competencies may become fragmented and weakened. The lack of core competence perspective can desensitize a company to its growing dependence on outside suppliers of core products. A company focused only on end products may fail to invest adequately in new core competencies that can propel growth in the future. A company that fails to understand the core competence basis for competition in its industry may be surprised by new entrants who rely on competencies developed in other end markets. Companies insensitive to the issue of core competence may unwittingly relinquish valuable skills when they divest an under17 performing business.

SUMMARY
Learn your competencies Develop your competencies Structure your organization around your competencies Involve core products in all end products Outsource non-competencies with strategic alliances and licensing.

Thank You

WHAT IS CORE COMPETENCIES?

Core competencies are the skills, characteristics, and assets that set your company apart from competitors. They are the fuel for innovation and the roots of competitive advantage.
For example, A Sony benefit is pocketability core competence is miniaturization At Federal Express benefit is on time delivery core competence is logistics management At Motorola benefit is undeterred communication core competence is wireless communication.

COMPETENCIES TO CORE PRODUCTS

Core products are the tangible evidence of our core competencies. They are key contributors to the customer benefits received from the end product.
Honda: Small gas engines Canon: Desktop laser printer engines 3M: Adhesives and substrates