Business Simulation Seminar Core Competencies and Competitive Advantage
Core Competencies Something that a firm can do well and that meets the following three conditions: • It provides consumer benefits • It is not easy for competitors to imitate • It can be leveraged widely to many products and markets. Gary Hamel and C. K. Prahalad in The Core Competence of the Corporation (1990).
Distinctive Competency • A core competency that only a few firms possess • In business, always look for an advantage • A ‘level playing field’ is not a good thing • Examples
Competitive Advantage • A position a firm occupies against its competitors • Comes in two forms: • Cost advantage • Differentiation advantage • “Sustainable competitive advantage” is position which competitors are not able to duplicate • Examples
Cost Advantage • What data do you look at to see if a business has this? • How can a business take advantage of this? • Does a company in the simulation have this?
Differential Advantage • Can be many areas • Product • Features, packaging, terms & conditions • Distribution • Can you see this in the simulation? • Product features? • Distribution? • Promotion? • Sales? • Terms & conditions? • Which are sustainable?
The Big Picture • Succeed with your customers and your profits will be good • Success with customers makes it easier to attract capital • More capital leads to more assets • More assets means you can serve customers better “Competitive Advantage from the Bottom Up,” Daniel Smith, CapSim Inc.