...VIEWPOINT Core Competence, Distinctive Competence, and Competitive Advantage: What Is the Difference? ANN MOONEY STEVENS INSTITUTE OF TECHNOLOGY HOBOKEN, NEW JERSEY ABSTRACT. Core competence, distinctive competence, and competitive advantage ABSTRACT. are 3 of the most important business concepts that managers, researchers, and educators rely on for decision making, pedagogy, and research. However, little attention has been paid to defining these concepts. As a result, they have become buzzwords that are used so frequently that their meanings are often taken for granted but are not fully understood. In this article, the author reviews the evolution of these concepts in business literature and provides comprehensive definitions, conceptual models, and examples to help clarify and distinguish the concepts so that failures of communication can be avoided. Keywords: competencies, competitive advantage, strategy Copyright © 2007 Heldref Publications 110 Journal of Education for Business S R ince its genesis in the mid-20th century, the study of business disciplines has become an established academic discipline. The proliferation of business curricula, journals, and academic and professional associations is evidence of a dramatic growth in business education. Although the growth has improved the understanding of business and informed business practices, with growth comes various problems. For example, business practitioners, researchers...
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...task of evaluating a company's resources and competitive position? A. What are the company's most profitable geographic market segments? B. How well is the company's present strategy working? C. Are the company's prices and costs competitive? D. Is the company competitively stronger or weaker than key rivals? E. What strategic issues and problems merit front-burner managerial attention? Which of the following is not a component of evaluating a company's resources and competitive position? A. Evaluating how well the present strategy is working B. Scanning the environment to determine a company's best and most profitable customers C. Assessing whether the company's costs and prices are competitive D. Evaluating whether the company is competitively stronger or weaker than key rivals E. Pinpointing what strategic issues and problems merit front-burner managerial attention The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as Awhether the company's present strategy is better than the strategies of its closest rivals based on such . performance measures as earnings per share, ROE, dividend payout ratio, and average annual increase in the common stock price. B. whether the company's key success factors are more dominant than the key success factors of close rivals. C. whether the company has the industry's most efficient and effective value chain. D. what are the company's resource strengths and weaknesses and...
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...Evaluating company resources and competitive capabilities In the previous chapter we descrbed how to use the tools of industry and competitive analysis to assess a company’s external situation. In this chapter we discuss the techniques of evaluating a company’s resource capabilities, relative cost position, and competitive strength versus rivals. Company situation analy’external market circumstances and to its internal resources and competitive capabilities. The sopotlight of company situation analysis in trained on five questions: 1. How well is the company’s present strategy working? 2. What are the company’s resource strengths and weaknesses and its external opportunities and threats? 3. Are the company’s prices and costs compaetitive? 4. How strong is the company’s competitive position relative to its rivals? 5. What strategi issues does the company face? To explore these questions, four new analytical techniques will be introduced: SWOT analysis, value chain analysis, strategic cost analysis , and competitive strength assessment. These techniques are basic stragic management tools be-cause they expose the ccompany’s resource strengths and deficiencies, its best market opportunities, the outside threats to its future profitability, and its compertitive standing relative to rivals. Insightful company situation analysis is a precondition for identifying the strategic issues that management needs to address and for tailoring strategy to company resources and competitive...
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...International strategy Explain the role and effect of any two international business strategies. As the globalization of the world economy and the speed up integration process the international competition is increased, the requirement for international business strategy is rising ever higher. International business strategy plays a vital role in the global economy, it not only to guide a company's development, but also link the global economy. What is strategy? A strategy is the pattern or plan that integrates an organisation's major goals, policies and action sequences into a cohesive whole. (Mintzburg, 1984) Those strategies established long-term objectives and provided the overall guidance for the operational decisions which are focus on the whole companies. They determine the overall direction of an enterprise and its ultimate viability in light of the predictable, the unpredictable and the unknowable changes that may occur in its most important surrounding environments. (Elizabeth, 2001) Internationalization of operations has led organizations to assume different types of strategies. For instance: the localization of KFC. When you eat in KFC you will discover that the test of food in England is different from the test in China. KFC changed the favour of food to Cater to the tastes of local people. McDonald's and KFC use this kind of international business strategy to make their profit. There are four basic strategies to enter and compete in the international environment:...
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...is not helpful in identifying the components of a single-business company's strategy? a. Initiatives to build competitive advantage b. Efforts to expand or narrow geographic coverage c. The company's resource strengths and weaknesses d. The company's key functional strategies Your Answer: The company's resource strengths and weaknesses CORRECT 2: SWOT analysis a. provides the basis for crafting a strategy that capitalizes on the company's strengths, overcomes its weaknesses, aims squarely at capturing the company's best opportunities, and defends against competitive and environmental threats b. provides a quick overview of where on the scale from "alarmingly weak" to "exceptionally strong" the attractiveness of the company's overall business situation ranks. c. helps provide a basis for matching the company's strategy to its internal resource capabilities and its external opportunities and threats. d. helps identify a company's core competencies and competitive capabilities and the seriousness of its resource weaknesses and competitive deficiencies. Your Answer: All of these. CORRECT 3: A core competence a. is a more durable company resource than a "distinctive...
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...HPSE-CT-2002-50026 (Thematic Network) 1st workshop : April 3rd –4th, 2003 (Strasbourg) RESOURCES AND COMPETENCES PERSPECTIVES ON STRATEGY OF THE FIRM: A discussion of the central arguments F. Amesse, A. Avadikyan, P. Cohendet Introduction: In 1994, Wernerfelt received an award for the best paper of the decade in Strategic Management Review (A resource-based view of the firm, 1984). Considering the fortune of the article among practicing managers (Wernerfelt, 1995), he admitted that such a fortune had been leveraged by the 1990 article of Prahalad and Hamel in Harvard Business Review (“The Core Competence of the Corporation”). Directly addressed to people in management and strategy, this article was clearly prescriptive as to the best way to set winning strategies for the firm, especially as to diversification and the abusive use of SBUs (Strategic Business Units) in highly decentralized profit centres. “In the 1990s, top executives will be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible”. Since the 1990s, the resource based view (RBV) and the core competence approach (CCA) became very attractive for many researchers and consultants. Such interest was well supported by what seemed to be a clear and superior way of setting strategies by large Japanese groups which frequently served as a benchmark case of core competence management. The strong and pervasive trends for continuous technological innovation and...
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...Distinctive competence Name Institution Date of submission Distinctive competence refers to a set of actions or capabilities that a firm is capable of doing well compared to its opponents and which offers it an advantage over the competitors. Distinctive competence is that which is unique that is done well by a firm and sets the firm different from the competitors (KOZAMI, 2010). Distinctive competence describes that unique or exceptional feature of an organization that its competitors does not possess .Distinctive competence is of many forms. This could be strong brands, skills, and patents Distinctive competence lies in various areas that include marketing activities that are unique and technology. A company requires developing strategy that uses distinctive competence to have the competitive advantage over the competitors. Distinctive competence of a company changes with time as other firms develop new capabilities. Distinctive competence also changes with market needs. Companies need to recognize their distinctive competence by cautious analysis (KOZAMI, 2010). There are many aspects that make distinctive competence. The aspects may be a function of a marketplace, design service the company supplies or its quality and higher service. Recognizing competitive advantage establishes the procedure for leveraging of resources and the determining the best circumstances in exploring business development options. For example, imaging is the distinctive competence...
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...2007 Identification of competencies The 4 different competences of Papa John’s International include its focus on providing high quality products, operating system, marketing and franchise system. Providing High Quality Products Firstly, Papa Johns’ focus on providing pizzas of superior quality to its customers has laid down the foundation for its success in the long run. Unlike its competitors who focused on cost reduction, Papa Johns focused on differentiating its pizzas. In fact, they were also able to prove in court that they used fresh and better ingredients in comparison to its competitors. This allowed Papa Johns to be rated number one in terms of customer satisfaction among all pizza chains in USA. Applying the VRIO framework, it can be said that this focus provided value to the company owing to its many benefits. Although a restaurant chain selling pizzas was not rare, selling pizzas of such high quality was not common. At the same time, this is not easily imitable by companies because focusing on higher quality will need a major shift from their current procedures and marketing strategies. Furthermore, Papa Johns has been extremely organized in exploiting this competence to its benefit. Hence, as this competence fulfills all the criteria of the VRIO framework, it is both a core and a distinctive competence. Operating System Papa Johns’ efficient operating system is also considered to be one of the competences as it provides value to the company by reducing restaurant...
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...RELEVANT TO ACCA QUALIFICATION PAPER P3 Studying Paper P3? Performance objectives 7, 8 and 9 are relevant to this exam POSITION-BASED AND RESOURCE-BASED STRATEGIES Imagine you are in the middle of a country. To your north there is a mountain range, to the south an ocean, to the west a desert and to the east, jungle. You are running out of food and have to move. But to where? So you look at whatever evidence you can get: weather forecasts, travellers’ tales, unreliable maps (because this is before GPS). No direction is without peril and all offer some reward, but you have to go somewhere. There seems to be a storm brewing in the mountains, malaria in the jungle and it’s the wrong season to tackle the desert. So you go for an ocean crossing, hoping to find a promised land, but always aware that more information might make you rue your choice, aware that you might have to change your direction, and aware that at some point, a change of direction will become impossible because you have reached a point of no return. Essentially, what has been described above is a position-based approach to strategy. The destinations are four possible strategies or business developments, the weather forecasts, tales and maps are the equivalent of tools such as PESTEL and Porter’s Five Forces. You are dealing with imperfect information and might have to abandon or modify a strategy. These tools might indicate that market and environmental factors make some strategies seem very unattractive, but...
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...Group 3 Q3 : Dose Under Armour have any resource strengths or competitive capabilities that qualify as a distinctive competence ? A/ A distinctive competence : is a competitively valuable activity that a company performs better than its rival, while the three competitive can get there resource such as Fabrics, raw material and cotton, So here among the three companies all of them has the same resource they can get from the same place, which eliminate any competence distinctive could occurs, which means there is no distinctive competence Q:8How does Under Armour's competitive strength compare against of Nike and the adidas Group?Do a weighted competitive strength assessment using the methodology presented in Table 4.4 in chapter 4 to support your answer.Based on you assessment and calculations, dose Under Armour have a net competitive advantage or disadvantage in competing against Nike and The adidas Group? A/ Under Armour is a public company offering of 9.5 million shares of class A common stock that generated net proceeds of approximately $114.9 million. when can see the the average rate of the stock hase increased gradually starting at $13 per share up to $31 per share. another advantage we can consider from these stocks which they are two types of stocks, Class A and Class B both of them has an option to vote within the organization, where these stock was trading in the $72 to $78...
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...------------------------------------------------- ------------------------------------------------- GROUP MEMBERS: HUMPHREY NSAMA (BAPSM) ------------------------------------------------- OSCAR HAMANGABA (BAPSM) ------------------------------------------------- LWIZYA M. MWENGWE (BAPSM) ------------------------------------------------- STANLEY NGANGULA (BAPSM) ------------------------------------------------- DANIEL YOMENA (bapsm) ------------------------------------------------- ------------------------------------------------- ASSESSMENT: ASSIGNMENT NO. 2 (‘INSIDE DYSON’ A DISTINCTIVE . COMPANY) ------------------------------------------------- ------------------------------------------------- Number of Words: 1,647...
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...Industries: Bartles & JaymesTeaching Notes Copyright © Gareth R. Jones, 1994SynopsisThis case is about a new industry—the wine cooler industry—and the manner in which Bartles &Jaymes, a subsidiary of Gallo Wines, became the market leader. It links the industry environment to organizational strategy and shows how competition develops in a new industry. It points out that a distinctive competence (e.g., marketing and distribution) leads to competitive advantage. It demonstrates the importance of using distinctive competences to manage the organizational environment and allows for an evaluation of Bartles & Jaymes’s strategy. The case considers how Gallo Company manages its environment and strategy as the leading wine company in the United States. Teaching Objectives * 1. To analyze the organizational environment. * 2. To show how new industries through new products and how environmental competition changes. * 3. To illustrate the importance of developing a distinctive competence to compete in an industry * .4. To demonstrate how strategy develops from a distinctive competence and how firms use their strengths to manage the industry environment. * 5. To show how vertical integration helps defend competitive advantage and manage the environment. This case offers insights into many organization-environment issues It shows how a strategy evolved into a new industry. Gallo Brothers introduced a new product—a wine cooler—through a new subsidiary, Bartles...
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...EXCUTIVE SUMMARY Marks and Spencer Group plc (M&S) is one of the famous British retailers in the world and the largest clothing retailer in the UK. Unfortunately, M&S did not change their strategic to adapt to a continuously changing economy, so that it suffered from strategic drift. From 2000, Luc Vandevelde and his management team attempt to turn the business around, with M&S’ unique resource and competence. This report identifies and analyses strategic capabilities and competitive advantages of M&S by using “threshold and distinctive capabilities” table and value chain model. Following this, there is a ratio analysis from 2000 to 2006, including Return on Capital Employed, Return on Assets, Net Profit Margin, Current Ratio and Debt to Asset Ratio. It also provides recommendations for M&S management which believed it vital for M&S’ obtain sustainable development and success. INTRODUCTION Marks and Spencer Group plc (M&S) is one of the British leading retailers and it specialises in the selling of high quality cloths and food. Since it was founded in 1884, and till the late 1990s, M&S is popular brand base on its unique strategic. However, the manager of M&S did not change its strategic to keep pace with the highly competitive economic environment, so that it lost its sales and market share to competitors. According to the case study, things started to improve since the CEO Luc Vandevelde changed the management style in 2001. He...
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...diversification. It started acquiring companies to serve its need for technological development, products and services. Amazon divided the company into three functional areas; product development, technological content and development, supply chain and distribution. From originally serving only the retail customers, in 2009 Amazon served three distinct groups that is consumer customers, seller customers and developer customers. Distinctive capabilities included its technological innovation capacity. Amazon had built the virtual sales person for its customers, by leveraging off information from millions of users. In the long term these innovations helped them achieve lower operating costs even though it cost heavy investments. Amazon was the price leader in a wide variety of products and was continuously able to please it customer by providing convenience. Core competences that Amazon had posses have been relatively significant. With its prime importance and vision to be customer centric and deliver them value to differentiating themselves from its competitors by distinctive capabilities and constantly regenerating better innovations for ease...
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...quick response to up-to-date luxury fashion trends in an affordable price, which meets the deeply held desires for young customers (Joy et.al, 2012). The store expansion has continued at several places, such as Denmark, the United States, Great Britain, also in several European Countries like Spain, Germany (Barman and Petersson, 2002). In order to sustain the growth rate of H&M, the CEO, in 2011, invested more stores and opened another 218 stores on the Champs-Élysées in Paris to strengthen their brand and ensure the future expansion. Following that, in the next few years, another 230 stores were established, involving 35 in China (Regnér and Yildiz, 2014). H&M has become the global leader in the ‘fast-fashion’ section, owing to its’ distinctive business approach which enhance the competitiveness. In common, the business model of H&M is ‘cheap-and-chic’, underlined high fashion at costs below other competitors, with the...
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