Using a relevant example, discuss how companies can use core competencies to generate

coherence premium
Executives, managers, and employees at every level should understand the way the company
creates value for its customers. Capabilities System should allow the companies to deliver their
core value proposition (i.e. its core competencies) and systems, processes, policies and personnel
should fit together.
Examples of market leaders which has leveraged on the coherence premium include Coca-Cola,
which stood out because of its intense focus on beverage creation, brand proposition and global
consumer insight. Wal-Mart's superiority in retail was also attributed to its sheer focus on four
capabilities: aggressive vendor management, expert point-of-sale data analytics, superior
logistics, and rigorous working-capital management.
On the other hand, ConAgra Foods created incoherence by wrongly acquiring companies that do
not fit into its capability sets and this resulted in poor corporate performance from 2002 to 2007.
Similarly Anheuser-Busch launched Eagle Snacks, assuming that both beer and snacks are
complementary to each other. Unfortunately, these adjacent products rely heavily on very
different distribution capabilities, and Anheuser-Busch does not have the right strengths or
networks to compete in the snacks market.