Core Competencies & Competitive Advantage

Objective: To tools to identify how to utilize core assets or strengths within a company. Participants should have a clear understanding of the importance of distinguishing in which things they excel and structuring their strategy around these areas.

Novus Business and IT Training Program

Lesson Overview
Always competitors! Purpose:
Identify top strengths/assets (COMPETENCIES) Use competencies as building blocks Develop strategies to be a stable, long-term leader in your market

Novus Business and IT Training Program

What are Core Competencies?

Assets that set your company apart Subset of strengths from SWOT analysis Meet the following conditions:
It provides benefits to the customer It is hard to imitate It provides access to a wide variety of markets

The roots of your tree.

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Identifying Your Core Competencies

Techniques:
Compile a list of company assets (both tangible/intangible) Identify which of your products have succeeded in the past Consider what positive reviews youve received from your customers

Be realistic Align with long-term goals

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The Core Competency Difference

Identify your competencies Develop your competencies Structure your organization around your competencies Involve core competencies in all end products

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Competitive Advantage
Competitive advantage is having greater profits than the average for the industry
Superior assets Superb capabilities Key success factors

No core competencies = below average performance = no competitive advantage

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Strategies of Competitive Advantage

Cost Leadership Similar product at a lower price Differentiation Unique product at a higher price

Understand both strategies and aim to achieve one

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Cost Leadership
Do not disregard differentiation Product must be comparable Not good if many competitors are trying to become the cost leader

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Differentiation
Unique in some way greatly VALUED by customer
A better product A quicker delivery system A stronger marketing approach Better customer service Longer product warranties

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Review
Core Competencies Provide benefit to the customer Be hard to imitate Supply access to a wide variety of market Competitive Advantage Lowest cost provider Better/more unique product

Core competencies + competitive advantage = long-term success

Novus Business and IT Training Program 9

In your groups with the company provided to by your instructor (caf, clothing department, restaurant, or bar) answer the questions below. Please create/imagine any missing information and indicate it in your answers. What are your assets? Please list 5-7. Select 2 of your top assets. What are ways to develop or improve these assets? Determine whether any of these assets can be a core competency using the criteria below. Explain why or why not.
Does it provide benefits to the customer? Is it hard to imitate? Does it offer access to a wide variety of markets?

Activity

Which one of the two strategies discussed to achieve a competitive advantage does your company have the potential to achieve? Why? How would you go about achieving this?
Novus Business and IT Training Program 10