Competitive Capabilities

Hello Friends, Today, we are going to discuss Competitive Capabilities. We already write some articles about Mission Statement: Meaning, examples, Benefits, and Components. It is a series of comprehensive guides for the establishment of entrepreneurship ventures. If You don’t know about the strategic management, Please read once on our Blog. Let’s start with some basics of Competitive Capabilities.

Capabilities

Capabilities refer to a corporation’s ability to exploit its resources. They consist of business processes and routines that manage the interaction among resources to turn inputs into outputs. For example, a company’s marketing capability can be based on the interaction among its marketing specialists, distribution channels, and salespeople.

Competency

A competency is a cross-functional integration and coordination of capabilities. For example, competency in new product development in one division of a corporation may be the consequence of integrating the management of information systems (MIS) capabilities, marketing capabilities, R&D capabilities, and production capabilities within the division.

Core competency

A core competency is a collection of competencies that crosses divisional boundaries, is widespread within the corporation, and is something that the corporation can do exceedingly well. Thus, new product development is a core competency if it goes beyond one division. E.g. FedEx has a core competency in its application of information technology to all its operations. When core competencies are superior to those of the competition, they are called distinctive competencies.

Strength and resource capability

Strengths are the basic capabilities of the organization in which it can be used to gain competitive advantages. It is a distinctive competence of an organization that gives a competitive advantage. During the strategic alternative analysis, some of the factors related to the strengths of an organization need to be analyzed with respect to each alternative:

  • Well developed strategy
  • Strong financial condition
  • Human resource competencies
  • Strong brand name/image/reputation
  • Strong advertising
  • Broad market coverage

Weaknesses and resource deficiency

It is the basic limitation or constraint of the organization which creates competitive disadvantages. It is the deficiency in resource, skills, capabilities, and knowledge which negatively affect the performance of an organization. The following are some of the examples of weaknesses.

  • Weak marketing plan
  • No clear strategic direction
  • Weak financial position
  • Inadequate human resources
  • Obsolete technology
  • Loss of brand name
  • Raising manufacturing cost etc.

Strategic Advantage

It refers to being in a better position in comparison to competitors. In other words‚ strategic advantage is the capability of an organization to outperform its key competitors over a long period of time. Organizations can have a strategic advantage if ‚ it can produce the products in low-cost ‚ creates variation in products or both. The organization should always focus on developing and creating those resources and competencies which can be helpful in maintaining a better strategic position in the market.

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