Core Competencies and

Sustainable Competitive
Advantage
Group 5
Hitesh Chopra PGP/13/275
Manish Nahar PGP/13/280
Prashant Khurana
PGP/13/290
Swati Bhatia PGP/13/304
 Agenda
• Core Competence and
Sustainable Competitive
Advantage
– Resource Based View
– Empirical Analysis
– Strategic Architecture
• Apple Computers, Inc.
• Sustainable Competitive Advantage
of Apple: Results
 Sustainable
Competitive
Advantage
Discovering Core Competencies

Core Competencies

Capabilities
Criteria for Sustainable Competitive Advantage
Value chain analysis
Resources
•Tangible
•Intangible
Value Outsourcing
Rarity
Inimitable
Organisation
Substitution
Dynamic
bilities lead to Sustainable Competitive

Core Competency
Rare Costly to Imitate
Capability

Exploitab
ility
Sustainable Competitive Ad

Valua-ble Non-Substitutable
 Impact of Core Competencies on
Competitive Advantage : Empirical Analysis

• Hypothesis: Dimensions of core competencies

have a significant positive relationship with
competitive advantage
• Methodology : Core Competencies & Competitive
Advantage factors were rated and then a
Regression Analysis was carried out
•
•
•
Analysis
Developing Strategic Architecture
C.K. Prahlad and Gary Hamel in the Harvard Business Review, “Core
competencies form the roots of the organization tree,
providing nourishment and stabilization.”

The corporation , like a tree , grows from its roots . Core

products are nourished by competencies and engender business
units , whose fruits are end products .
 Agenda
• Core Competence and Sustainable Competitive
Advantage
• Apple Computers, Inc.
– Why Apple?
– SWOT Analysis
– VRINE Analysis
– Applicability of Core Competencies
– Innovation in Large Enterprises
– Causal Ambiguity Paradox
– Competency based model of Sustainable
competitive advantage
– Firm Resources and Sustainable
 Why Apple?
Address Out of
Latent the box
needs thinking

INNOVATIO
N
Related
and
Attracti Unrelate
ve d
Designs Diversif
ication

Core
Competency
and
Sustainable
Competitive
Advantage
SWOT
 •Competence in innovation in technology and design
Valuable •Good sales channels
•Human Capital

•Steve Jobs and Jonathan Paul Ive

Rare •They drive the innovation in technology and designs

•Resources are inimitable

Inimitable •Comes from the Freedom to exploit the creative skills
•Very hard and costly to imitate

•Firm specific knowledge as well as the culture within the company are difficul
•Non -Substitutable
Culture drives the zeal within the company to excel and innovate

Above 4 steps show that the company has got the capabilities to exploit the resou
AppleExploitable
is synonymous with Innovation. Hence they are able to command a premium for
Higher product Aspiration and Realization
Applicability of Core Competencies

iPod

iTunes

iPhone

iTV

iPad ??
Apple: The Innovation Machine
 Innovation in Large Enterprises

Competency
Traps

ably favour retention of routines that “lead to distinctive competence and specia
experimentation”
Innovation in Large Enterprises
The capacity to innovate is in itself a core-competence

Experimentation with these three is necessar

 Innovation at Apple

Bringing the best personal computing experience through its innovative

products
 The Causal Ambiguity Paradox
Are Steve Jobs and Jonathan Ive the only reasons for Apple’s success??

Internally Developed
Software
Superiority
Strategic Acquisitions

lly Ambiguous Competencies

Address LatentEncouragement
Needs of tacit competenci
based model of Sustainable competiti
• It is a n in te g ra te d m o d e lth a t co m b in e d
a ll so u rce s o f co m p e te n cie s, n a m e ly

M a n a g e ria l C o m p e te n cie s a n d S tra te g ic fo cu s

In p u t-b a se d co m p e te n cie s O u tp u t-b a se d co m p e te n cie s

Tra n sfo rm a tio n -b a se d co m p e te n cie s

ources and Sustainable Competitive A
 Agenda
• Core Competence and Sustainable
Competitive Advantage
• Apple Computers, Inc.
• Sustainable Competitive
Advantage of Apple: Results
–
–
%

Financials

45 43
11/21/2010
40

35
32

30

25 24
11/21
20 19 /2010

15 14

10 8
5 6 6
5

11/2 11/2 11/2 11/2 11/2 11/2 11/2 11/2 11/2

1/20 1/20 1/20 1/20 1/20 1/20 1/20 1/20 1/20
10 10 10 10 10 10 10 10 10
%

Financials

9
8
8 11/21/2010

5 5

4 11/21/
3
3
2010
2
2
1
1
0
0 0
0
0
-1

11/2 11/2 11/2 11/2 11/2 11/2 11/2 11/2 11/2

1/20 1/20 1/20 1/20 1/20 1/20 1/20 1/20 1/20
10 10 10 10 10 10 10 10 10
-

Financials

350
325
301
11/21/2010
300
300
263
250

200

159
150
121
103
100
71

50

11/2 11/2 11/2 11/2 11/2 11/2 11/2 11/2

1/20 1/20 1/20 1/20 1/20 1/20 1/20 1/20
10 10 10 10 10 10 10 10
Bibliography
Bibliography
Bibliography
•
• Thank You