Novus Business and IT Training Program

Core Competencies & Competitive Advantage

Objective: To tools to identify how to utilize core assets or strengths within a company. Participants should have a clear understanding of the importance of distinguishing in which things they excel and structuring their strategy around these areas.

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Lesson Overview

• Always competitors!• Purpose:– Identify top strengths/assets

(COMPETENCIES)–Use competencies as building blocks – Develop strategies to be a stable, long-

term leader in your market

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What are Core Competencies?

• Assets that set your company apart

• Subset of strengths from SWOT analysis

• Meet the following conditions:– It provides benefits to

the customer– It is hard to imitate– It provides access to a

wide variety of markets

• “The roots of your tree.”

4Novus Business and IT Training Program

Identifying Your Core Competencies

• Techniques:– Compile a list of company assets (both

tangible/intangible)– Identify which of your products have

succeeded in the past– Consider what positive reviews you’ve

received from your customers

• Be realistic• Align with long-term goals

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The Core Competency Difference

• Identify your competencies

• Develop your competencies

• Structure your organization around your competencies

• Involve core competencies in all end products

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Competitive Advantage

• Competitive advantage is having greater profits than the average for the industry– Superior assets– Superb capabilities– Key success factors

• No core competencies = below average performance = no competitive advantage

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Strategies of Competitive Advantage

Cost Leadership• Similar product at a

lower price

Differentiation• Unique product at a

higher price

Understand both strategies and aim to achieve one

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Cost Leadership

• Do not disregard differentiation

• Product must be comparable

• Not good if many competitors are trying to become “the cost leader”

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Differentiation

• Unique in some way greatly VALUED by customer– A better product– A quicker delivery system– A stronger marketing approach– Better customer service– Longer product warranties

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ReviewCore Competencies• Provide benefit to the

customer• Be hard to imitate• Supply access to a

wide variety of market

Competitive Advantage• Lowest cost provider• Better/more unique

product

Core competencies + competitive advantage = long-

term success

11Novus Business and IT Training Program

ActivityIn your groups with the company provided to by your instructor (café, clothing department, restaurant, or bar) answer the questions below. Please create/imagine any missing information and indicate it in your answers.

• What are your assets? Please list 5-7.• Select 2 of your top assets. What are ways to develop or

improve these assets?• Determine whether any of these assets can be a core

competency using the criteria below. Explain why or why not.– Does it provide benefits to the customer?– Is it hard to imitate?– Does it offer access to a wide variety of markets?

• Which one of the two strategies discussed to achieve a competitive advantage does your company have the potential to achieve? Why? How would you go about achieving this?