Diagnosing and building

COMPETITIVE
ADVANTAGE(CA)
and
Core competence(CC)
K . CHITRA
09AA09
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 How do firms built CA?
§ Firm utilize strategy for building CA.
 -survival and growth of the company
§
§ CA at Corporate Level as well as Business Level.
 -one unified support system
§
§ Strategy uses as well as creates CA.
 - cumulative strategic actions.
§
§ 2
 TOOLS FOR IDENTIFYING CA
 Two useful tool for identifying and building CA


vBenchmarking
vValue Chain Analysis


BENCHMARKING
 “The process of comparing the company’s products
 and processes to those of competitors or leading firms
 in other industries to find ways to improve quality
 and performance”
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 Types of benchmarking

 INTERNAL BENCHMARKING


 FUNCTIONAL BENCHMARKING


 COMPETITVE BENCHMARKING


 GENERIC BENCHMARKING

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 TRAITS OF BENCHMARKING
vLarger scope than inter-firm comparison.
ØModel for emulation
Ø
ØIdentifies and quantifies the performance gap.
Ø
Ø3 components for relative performance
§ Products and services
§ Business processes and procedures.
§ People
 5


vValue creation and market-orientation



§ Capability of smarter product launch

§
§ Efficient distribution channel
§
§ CRM
§
§ Effective management of marketing information
§
§ Ability to price optimally.
§ 6

“HINDUSTAN UNILEVER AND FORD TAURUS
PROJECT”

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 Value chain analysis


 Vastmatrix of value creating activities superior than the

competitor.


 Better
grasp of strength and weaknesses of the
competitor.


 In-depth comparison of value chain enhances firm to

identify and built competitive advantage.
Eg - EASTMAN KODAK

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VALUE CHAIN DIAGRAM

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Different routes to built CA
 CA THROUGH LOWER COST

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CA THROUGH TECHNOLOGY AND R&D

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CA THROUGH BRAND POWER

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CA THROUGH ALLIANCES

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CREATING ENTRY BARRIERS
Maruti udyog

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Ca through well trained human resources

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CA THROUGH PRODUCT DIFFERENTIATION

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 CA THROUGH INNOVATIONS

Godrej Nano Chotukool PROJECT SHAKTHI

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Ca through integration

Uptron
Colour
Picture Tubes
Unit

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 CA-A Conscious and Continuing Endeavour
 Competitive Advantage gets eroded with time.

 Building durable CA requires Unique Competence .

 Eg -Dell’s CA in Distribution


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 Core competence

“It is a fundamental, unique and inimitable
 strength of the firm.”

qProvides the firm, the access to a variety of products/markets.

q
qContributes to customer benefits in the products.
q
qCannot be easily imitated easily by competitors.
q
qCompetence at the root technology gaining lasting advantage and
 fresh value enhancement.
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Examples of core competence

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q CRITICAL COMMENTS ON CC
q
qRestricts the number of business the firm can be in
 -3M CORE CONCEPT-Sticky Tape


qDiversification makes a dent in the firm’s CC

 -Tatas and HUL- Lakme and Tomco (Cosmetics)



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 Distinction between ca and cc
Competitive Advantage Core Competence

1. Does not necessary imply CC. Imply a number of CA.

2. Not a Sure success formula on a Sure success formula on a long

long run.
3. Provides Temporary
Competitive Superiority.
4. Grows from a functional
strength.
5. CA in a given business or
product.
6. Can be easily imitated and
competitors catch up fast.
7. Not unique to the firm on the
long run.
run.
Provides Lasting Competitive
Superiority.
Grows from the roots of
Businesses and products.
CC excels in a variety of
businesses /products.
Inimitable preserve of the firm
and difficult to catch up.
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Unique and fundamental to a
firm.
THANK YOU!!

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