The Core Competence of the Corporation

1. The Core Competence of the Corporation Karim Zaqleh Chun-Wei Chung Chanida Rattanapongumpai Nipitporn Thavisin Phachara Auttapibarn Drew Gerhard

2. Time Line

3. Time Line (cont.)

5. Core Competency • The most important value creating skills in one organization as well as the major areas of expertise that differentiates the organization and is critical to the company’s growth in the long run.

6. Core Competency (cont.) • Resources • Capabilities Importance of Core Competency: Determines the leadership and long term company growth

7. Identifying Core Competency • Provides potential access to a wide variety of markets • Make a significant contribution to the perceived customers benefits of the end products • Difficult for competitors to imitate

8. Core Competency (cont.) Characteristics • Collective Learning • Organization of work and the delivery of value • Communication, involvement, deep commitment to working across organizational boundaries • Doesn’t diminish with use

9. Core Competency (cont.) The erosion of core competency Shouldn’t do… • Outsource what considered to be your core competence • Forego opportunities to establish competencies that are evolving in existing business • Divest/destroying competencies (GTE)

10. Core Competency (cont.) • Resources • Capabilities • The components of subassemblies that actually contribute to the value of the end products. • The physical embodiments of one of more core competencies. • Well-targeted core products can lead to economies of scale and scope.

11. Relationship of Components in Diversified Corporation End Products Business Units Core Products Core Competence

12. Strategic Architecture • A roadmap of the future that identifies which core competencies to build and their constituent technologies. • A tool for communicating with customers and other external constituent • Advantages • Provide a logic for product and market diversification • Make Resource allocation priorities transparent to the entire organization

13. Strategic Business Units (SBUs) • Why not SBUs? • Under Investment in developing Core Competencies • Imprisoned Resources • Bounded Innovation

14. Future Outlook • SBUs is an important part in building core competency • Core competencies shouldn’t be created for only one business unit but the company as a whole. • Core competencies are the resources that can be allocated throughout the organization

15. The Question • What is a “core competence” of a corporation? • Why core competencies do not diminish in an organization?

16. Core competence • Cluster of extraordinary abilities or related 'excellences' that a firm acquires from its founders, after consistent striving over the years, and which cannot be easily imitated. • Provide access to a wide variety of markets • Contribute significantly to end-product benefits • Be difficult for competitors to imitate

17. Core competence examples • Sony • miniaturization • Toyota • manufacturing • Honda • engine design

18. Core competencies do not diminish • A wooden doll maker buys wood.

19. The wood is used to make dolls

20. During this process, the normal asset diminishes with use. • During this process, the core competency of the companies woodworking abilities will increase.

21. The tyranny of the SBU? • Portfolio of businesses • Lack of vision to build competencies • Anachronism • Decentralization • Heretical

22. Two concepts of the corporation: SBU or Core Competence

23. Individual Core Competence? • Communication skills • Creativity/Innovation • Flexibility/Adaptability • Interpersonal/Group Skills • Leadership • Organizational Understanding & Global Thinking • Ownership/Account/Dependability • Customer Satisfaction