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Core competencies and Functional Strategies

Core competencies and Functional Strategies

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Published by ClassOf1.com
Core competencies are organizational strengths or abilities, developed over a long period of time, that customers find valuable and competitors find difficult or even impossible to copy. Honda, for example, is recog¬nized for having core competencies in the engineering and manufacture of small gas- powered engines. Those core competencies have helped Honda conquer numerous mar¬kets, including the markets for motorcycles, cars, lawnmowers, jet skis, and home generators.
Core competencies are organizational strengths or abilities, developed over a long period of time, that customers find valuable and competitors find difficult or even impossible to copy. Honda, for example, is recog¬nized for having core competencies in the engineering and manufacture of small gas- powered engines. Those core competencies have helped Honda conquer numerous mar¬kets, including the markets for motorcycles, cars, lawnmowers, jet skis, and home generators.

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Published by: ClassOf1.com on Apr 17, 2013
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07/11/2013

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OperationManagement 
LEARN TO EXCEL
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Sub: Operation Management Topic:
 
Business Strategy
*
Core competencies and Functional Strategies
Core competencies
are organizational strengths or abilities, developed over a long period of time,that customers find valuable and competitors find difficult or even impossible to copy. Honda,
forexample
, is recognized for having core competencies in the engineering and manufacture of smallgas- powered engines. Those core competencies have helped Honda conquer numerous markets,including the markets for motorcycles, cars, lawnmowers, jet skis, and home generators. Corecompetencies can take many forms and even shift over time. IBM used to be known as a computer
hardware company. Today IBM’s core competency is arguably its ability to provide customers with
integrated information solutions and the consulting services needed to make them work. As a recent
magazine article noted, “good IT staffers are hard to find, but IBM Global Services alone has 150,000.That makes IBM the world’s largest IT services provider.” You can imagine how hard it would be for
other f 
irms to try to duplicate IBM’s advantage. In some cases, the ability of a firm to manage its
supply chain partners may in itself is considered a core competency. The ability of a firm to manageits supply chain partners may in itself is considered a core competency. This is certainly the ease for
Dell Computer Corporation, which practices what Michael Dell calls “virtual integration." While not
all organizations are dependent on their supply chain partners as Dell is, current industry trendssuggest that more and more organizations are focusing on developing only a few core competencies
and outsourcing everything else. This puts a premium on an organization’s ability to select good
partners and coordinates the flow of information and material between partners. It creates risks,
especially if the organization’s selected core competencies fall out of favor in the future.
 
Functional strategies
translate a business strategy into specific actions for the functional areas, suchas marketing, human resources, and finance. An operations and supply chain strategy might addressthe manufacturing or service processes needed to make a specific product, how suppliers will beevaluated and selected, and how the products will be distributed. Managers should be able to pickany specific strategic action at the functional level and trace it back to the business strategy and,
 
 
Sub: Operation Management Topic:
 
Business Strategy
*
ultimately, to the firm’s mission statement. When the different levels of the strategic planning
process fit together well, an organization is said to ha
ve good strategic alignment. A firm’s strategies
should also be aligned across the functional areas. Continuing with the above example, operationsand supply chain efforts aimed at developing a European supply base should be matched bymarketing, finance, and human resource efforts aimed at expanding the firm's global presence.Indeed, many so-called functional-level strategies such as new product development and informationtechnology are really better described as cross-functional, as the responsibility, authority, andresources for these activities often reside in multiple areas.

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