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ASM Competencies

Core Competencies serve as a source of competitive advantage, create value and provide opportunity for above-average returns. Resource-based Model Focuses on the inside of the firm - Focuses on the environment outside the firm. Competitive Advantage Roots Build Resources Distinctive competency Build capabilities Dynamic capabilities Constant change in processes to adapt to the uncertain environment.

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Satya Sasank
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177 views18 pages

ASM Competencies

Core Competencies serve as a source of competitive advantage, create value and provide opportunity for above-average returns. Resource-based Model Focuses on the inside of the firm - Focuses on the environment outside the firm. Competitive Advantage Roots Build Resources Distinctive competency Build capabilities Dynamic capabilities Constant change in processes to adapt to the uncertain environment.

Uploaded by

Satya Sasank
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Competencies

MPIBA-01201 5th February 2013 Adapted from: Thomas L Wheelen & J. David Hunger Competitiveness & Globalization By: Michael A Hitt, R. Duane Ireland , Robert E. Hoskisson
Leben Johnson

ASM-Competencies

Competencies
Resources: An organization's assets
Tangible Assets: Plant, Equipment, Finances and location Human Assets: Number of employees, skills and motivation Intangible Assets: Patents, Copyrights, knowledge, culture and reputation.

Capabilities: Are the abilities to exploit its resources and are functionally based. Example: Marketing capabilities, Manufacturing capabilities, HR capabilities.
Dynamic Capabilities: Constant change in processes to adapt to the uncertain environment.

Competencies: Cross functional integration and coordination of capabilities.


Example: Competency of new product development is the results of integrating MIS, Marketing, R&D capabilities. Core Competency: A competency that a corporation can do well across divisions. Distinctive Competency: When Core Competency is superior to competition and differentiates product. VRIO Framework: Value, Rareness, Imitability, Organization.

ASM-Competencies

Criteria for Resources and Capabilities That Become Core Competencies


Valuable Rare

Core Competencies

Nonsubstitutable

Costly to Imitate

ASM-Competencies

How Resources and Capabilities Provide Competitive Advantage


Valuable Allow the firm to exploit opportunities or
Rare Possessed by few, if any, current and
potential competitors neutralize threats in its external environment

Costly to imitate When other firms cannot obtain them or


must obtain them at a much higher cost

Nonsubstitutable The firm is organized appropriately to obtain


the full benefits of the resources in order to realize a competitive advantage
ASM-Competencies

Core Competencies
When the four key criteria of resources and capabilities are met, they become core competencies. Managerial competencies are especially important. Core competencies serve as a source of competitive advantage, create value, and provide the opportunity for above-average returns.
ASM-Competencies 5

Industrial Organization (I/O) Model

Why Two Models?


Resource-Based Model
Focuses on the inside of the firm

Focuses on the environment outside the firm.

Successful strategy formulation and implementation actions result only when the firm properly uses both models.

ASM-Competencies

Competitive Advantage Roots


Build Resources Distinctive Competencies Shape Capabilities Build
Functional Strategies Superior: -Efficiency - Quality - Innovation - Customer Service

Differentiation Value Creation Low Cost Superior Profitability

ASM-Competencies

Competitive Advantage
Competitive advantage Factors:
Value: The amount of value the customers place on the product Price: The price that a company charges for the product Cost: The cost of creating that value

V-P

V-P=Consumer Surplus

V P C

P-C

P-C=Profit Margin

V-C=Value Created V = Value to Consumer P = Price of Product C = Cost to production

ASM-Competencies

Value Creation and Pricing Options


Option1: Lowers Price To generate demand Option2: Raises Price To reflect value V-P V-P V-P P-C P-C P-C

Initial State

ASM-Competencies

Value Chain
The chain of activities that a company performs to add value and transform an input into an output. High Toyota Corolla

Lexus

Ford Explorer Reliability Yugo Low Inferior


ASM-Competencies

Value

Attributes Value Superior


10

Durability of Competitive Advantage


Barriers to Imitation: - Imitating Resources. - Imitating Capabilities. Capability of Competitors: - Strategic Commitment. - Absorptive Capacity. Industry Dynamism:

Loosing Competitive Advantage


Inertia: Prior Strategic Commitments: The Icarus Paradox: Craftmesn, Builders, Pioneers and Salesmen Uncertainty Poor commercialization Poor positioning Strategy Technological Myopia Slow to Market

ASM-Competencies

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Sustaining Competitive Advantage


Focus on building blocks. - Institute continuous improvement & Learning - Track best industrial practices - Benchmark - Overcome inertia.
-

ASM-Competencies

12

Building Competitive Advantage


Achieving Superior Efficiency: - Economies of Scale

Unit Cost
Economies of Scale

Diseconomies of Scale

Output
ASM-Competencies 13

Building Competitive Advantage


Achieving Superior Efficiency: - Learning Effects

Unit Cost

Time 1 Learning Effect Time 2

Output
ASM-Competencies 14

Building Competitive Advantage


Achieving Superior Efficiency: - Flexible Manufacturing and Mass Customization Traditional Manufacturing Flexible Manufacturing

Unit Cost

Variety Related Volume Related

Unit Cost

Total Unit Cost

Total Unit Cost Volume Related Variety Related

Production Vol & Product Variety

Production Vol & Product Variety

ASM-Competencies

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Building Competitive Advantage


Achieving Superior Efficiency: - Marketing and Efficiency
(+)

Profit per Customer

(-)

Length of time customer stays with company

ASM-Competencies

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Building Competitive Advantage


Achieving Superior Efficiency: - Material Management - R & D Efficiency - Human Resource Efficiency Hiring Efficiency Employee Training Self-Managing Teams Pay for Performance - Information System and Internet Efficiency - Infrastructure Efficiency - Total Quality Management (TQM) Six-Sigma Methodology Build Org. Commitment to Quality Focus on the Customer Measure Quality Set goals and create incentives Solicit inputs from employees Identify defects and trace them to source

ASM-Competencies

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Building Competitive Advantage


Achieving Superior Efficiency: - Innovation Quantum Innovation Incremental Innovation Build Skills in Basic and Applied Research Project Selection and Management Cross-functional integration Product development teams Partly parallel development process

Gate 1

Phase 1 Idea Generation

Phase 2 Project Refinement

Gate 2
Phase 3 Project Execution

Market

The Development Funnel


ASM-Competencies 18

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