2.When competence is applied to an organization, it can be characterized as capacity of an organization to achieve something. If an organization can overshadow its rivals on a competitive nature of an action, then it can be said to be having the center competency for particular activity. Also, if an organization fails to meet expectations than the majority of its rivals in relation to competitive factor, then it can be concluded that it has low competency in that particular activity. Competency is not something that an organization possess or not, but it is just but a variable that every organization has to a specific level(Bergenhenegouwen,2010).More often than not, it is evaluated by comparing the performance of an organization with its rivals. Also, the regions of center competencies varies with sectors like trading, manufacturing, and the service aligned sector.
For instance, Disney one of the leading companies. In fact it is apparently it’s among the best service-oriented organizations in the world, there center competencies is just but in leadership, workers engagement and the service. They utilize their leadership abilities to carry out activities for a sustainable and positive change in their organization .They attempt to develop committed workers with desire to lead one day too, which corresponds with their next main competency of worker relation. Disney adheres to four steps so as to accomplish this objective: training, employee selection, communication and care (Hitt, Hoskisson,& Kim,2011) .Finally, Disney attributes their ability to comprehend client service to putting the correct service standards and principles instead of technology and friendly transaction.
On the contrast, one of the leading companies in manufacturing; Samsung, has moderately different main competencies. There exist three major forces on Samsung’s main competencies; To start with is promotional force, it illustrates entrepreneurial know how and organization culture of encouraging development and key decision undertaking, the organizational force acts as the key to organization’s smooth running of corporate strategy whereas internal force indicates strength of Samsung to build its technology in a manner that is directed towards its main competitive advantage.
So how does this big organizations engineer their main competencies? These major competencies are normally a consequence of the resources which are utilized so as to accomplish competitive advantage in any given activity. Generally the impact of an asset to the activity relies upon a couple of things, for example, the appropriateness of a resource to the activity. Also, how co-ordination and management of this resource is done, experience of an organization with regards to the resource, the health of the resource and performance of the complimentary resources. There exist two sorts of resources within an organization; intangible and tangible. The tangible resources are entails building, plant, employees, equipment while the intangible resources are knowledge, experience, skills, good will and among others. The following hindrance in the wake of recognizing resources is the question which resource is needed in which is required to carry out what action. Some of the ways utilized in choosing the resource to be used for a given activity are versatility, sustainability, and also the value. Value of the resource means significance of that resource to give competitive benefit that is valuable to consumers in an action, whereas sustainability simply means the time competitive benefit that is being valued by consumer will last, whereas versatility refers to the application of resource along varied product lines and the market.
For instance, the competitive advantage of Wal-Mart is as a result of early relocation into carefully chosen rural regions in southern part of United States. Also, it initiated sophisticated technologies for reporting and inventory control. These systems were uncommon during that time. Its competitors also didn’t have adding to the competitive advantage of Wal-Mart. Over time, organizations like the K-Mart started building their own inventory control systems, but they could not match Wal-Mart’s strategic geographical locations to attain first mover advantage as the Wal-Mart that had already all this resources(American Library Association,2009). Therefore geographic location resources is more sustainable as compared to a sophisticated region of sale technologies in the mortar and brick retail sector.
On the other side, a seemingly exciting article that was published in Harvard Business review, it interrogates the significance of the fundamental competencies to the consumers. As per the article, currently more and more fundamental competencies are used as enterprise out but not as client-in Schrage (2013).The formulae to attain fundamental competencies are encouraging big companies and several business people to watch inwards instead of looking outwards so to initiate value for client, that is to mean more attention is diverted in direction of cutting corners. Meaning, the consumer is a beneficiary in this fundamental competencies and not being the supposed driver of it. For instance, FedEx’s main competencies lies in logistic network and digital. These being its innovation platform. Here the consumer is a just beneficiary of the transport capabilities of the FedEx.
Despite this article shedding lights on a number of interesting counter arguments, still, there are several arguments consolidating the significance of core competencies. To start with, it ensures and facilitate a maximum usage of the resources within a company which are the root to a competitive advantage in any given setting. It’s common for the resources not to be fully utilized or even in some cases not used at all except if needed for accomplishment of the fundamental competency. Further, the fundamental competencies takes the center stage in configuring and coordinating two or many resources into a single significant fundamental competency. Some resources is perceived not to be useful when they are on their own. However, when combined with different other resources, they will yield vital combination resource for an organization. Finally, it’s very unlikely for any given resource to be very scarce and highly significant, but then a combination of appropriate kinds of resources so as to generate a fundamental competency are very scarce and significant (Markides, & Williamson, 2013). This makes very challenging to imitate such competence and therefore adding up to their advantage. Therefore, putting into consideration all above arguments and factors we can come to a conclusion that despite core competencies being challenging to achieve, they are very significant for the continued prosperity of a company.
Companies should always apply appropriate competence so as to still remain relevant and make profit. Managers should embrace competence that are hard to be copied by competitors. It is also advisable to combine various resources so as to come up with competitive advantage.
3.Different companies embrace distinctive procedures to overcome profoundly unpredictable business surrounding. For instance, in 2004 Kodak utilized approximately 784 million dollars to invent technologies to alter the manner in which individuals store, view and take pictures. On the other side, whereas Hewlett-Packard utilized a fairly little amount of about 50 million dollars per annum to engineer and embrace their competitors vision of the home-based picture printers (Kazi, 2018). As a result of huge amount of investment made and risk many organizations fail to ensure these kind of strategies work, hence they go for third strategy where risk is less. Under third strategy, organizations hold on until they understand the manner in which market respond to an introduction of a new service or products by the rivals. Despite third strategy being low in terms of risk, it creates a chance for other rivals to join and take control of the market turning it so unattractive for more new entrants
Managers commonly utilize traditional tactical formation so as to overcome such conditions, whose main aim is to project the most probable results and initiate a plan that is mainly based on that result. This strategy works only on a predictable and stable environment. The Traditional strategies makes managers to only think about future as either uncertain or being certain leaving nothing to chance(Courtney, Kirkland,& Viguerie,2012). This thought is even echoed in cash flows that are prepared; all the underlying uncertainty remains always hidden. Risk-averse managers mainly focus on the internal criteria like the quality management and cost reduction in making decisions other than external forces like the products, market, new technologies among others. However, unpredictability or uncertainty about market is always there, so relevant information can be utilized to come up with strategies like competition, market demographics, elasticity of demand ,current technologies among other.
Managers can always come up with the most appropriate strategies after conducting an analysis. Conducting analysis assist companies come up with probabilities of best alternatives to a market situation(Mintzberg, & Waters, 2015).A good example is implementation of VAT in GCC countries like UAE from the year 2018.This move can have very big effect on doing business activities in the UAE, which will intern affect the economy. There exist always uncertainty on businesses on the issue of increasing tax, customers also worrying of increased prices
Range of futures also influence business decision, for example, if Tesco or Walmart intends to join a foreign market like India for instance, it would commonly carry out a market research for consumer penetration rate, for instance, if the outcome is 10 percent to 40 percent. Here uncertainty is true, there is several dimension of uncertainty, and therefore it is always impossible to predict (Fine, & Hax,2013).
If pharmaceutical organization decides to join airline industry, it will encounter several uncertainties such as demand, pricing, logistics, technology among others. This condition would be very challenging to predict
Firms usually utilize strategic posture as tool to overcome these ambiguous conditions. The three forms of strategic posture are; reserving the right to play, shaping and adapting.
The shapers work towards having a say in their industry with help of their new structures. They try to make new open doors by being in charge of the market direction, undertaking substantial degree of risk and venture like the case of company Kodak. On the other hand, adapters utilize the existing sector structure when reacting to the opportunities coming out of market. For instance, in telecommunication sector the retailers play adapters role since they only purchase and resell goods that are demanded by consumers from big telecom organizations. Finally, we also have strategic posture, where one reserve the right to play. Here the company waits until such a time when the market is predictable and then come up with business strategies. A good example of such is the can be the auto parts after market, where small manufacturers commence manufacturing a given product after the product has gain popularity among consumers; well established in the market because of good work well done by the original equipment manufacturer, by working on factors that minimize cost of production. Although these postures can be utilized as a tool to overcome unpredictability within the market, they are also the way to the final destination. There are 3 main kinds of actions an organization can undertake under uncertain conditions; options, no-regret moves and big bets. The big bets is where a big investments and acquisitions may turn to be very profitable later or result in a big loss for the organization (Pearce, 2009). While option is simply embracing decisions that will minimize loss and increase profit. These commonly entail making small first investments aiming at increasing the investment in the near future with the evaluation of how markets behave. Finally, no regrets-moves simply denotes the activities that despite having minimal returns to the investment, they still have low to no risk being involved in return (Bird,2014).
Traditional strategy entails carrying out a lot of analysis so as to generate a clear strategic undertaking for the future. This only seems true for the predictable environment, but for an uncertain market situation, these kind of tool fail to establish a strategic plan for an organization. In current complex and quickly changing business environment, it is extremely important to initiate approaches that can work in the case of unpredictable environment(Vecchiato, & Roveda, 2010). Therefore, the utilization of strategic postures is important in coming up with the actions to challenge such conditions, it also direct different organizations towards a direction of a profitable future.
Companies should use distinctive approaches to overcome unpredictable business environment. They should embrace high risk approaches since low risk approach encourage competition.
2.Service or new product ideas can be categorized into four main categories which include;
Sustaining
New market
Breakthrough
Disruptive
A breakthrough kind of innovation is a thought of majority every time they think about innovation. Breakthrough product more often combine functionality of a number of varied products all into a single one .This is how most of the products of Apple can be categorized during the era of the late Steve Jobs-especially the Iphone(Noe, Hollenbeck, Gerhart, & Wright,2009). When the product was launched, its beauty, power, simplicity, ease of use and functionality put every other single phone that was in the market into shame.
Sustaining ideas always have something related to the improvement of the current product through developing generation 2,3,4,5 and so on until it reaches a point where product completes its life cycle commonly big organizations are very excellent in developing sustaining innovation as a result of their resources (Rothaermel,2015).
Managers always reason of a new market in form of geography like for instance entering emerging markets like china or india. However, new market inventions can be thought in form of use scenarios (Swink, Narasimhan, & Wang,2015). New market inventions involves applying a existing product in a different way and in some cases even for a different section of consumers The best example to illustrate this is Arm and Hammer baking soda. The main use of baking is a leaving agent for the dough during baking of breads (Miller, & Friesen, 2012). However, after being in the market for a while, Arm and Hammer noticed a trend among its clients-use baking soda as the deodorizer. The new discovery made the company to commence selling baking soda as being a multi-purpose good other than being used for baking only.
New market innovations can only be successful if done in the right manner. In some instances, to be successful within a new market, one may need to do some modification to your product to suit new application or use case (Oke,2014). In some cases, you just introduce your product to the market.
It is a term that can best be explained by why successful companies fail. Startups are in a position to be accepted into market easily for their products by simply lowering the cost, minimizing number of features, simplifying user experience. The software on iphone can be said to be disruptive (Subramanian,& Nilakanta,2016).
To be successful in market a company need to work on ways of reducing product cost, making product easy to use and developing more generation for the product
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Bergenhenegouwen, G. J. (2010). Competence development-a challenge for HRM professionals: core competences of organizations as guidelines for the development of employees. Journal of European Industrial Training, 20(9), 29-35.
Bird, B. (2014). Implementing entrepreneurial ideas: The case for intention. Academy of management Review, 13(3), 442-453.
Courtney, H., Kirkland, J., & Viguerie, P. (2012). Strategy under uncertainty. Harvard business review, 75(6), 67-79.
Fine, C. H., & Hax, A. C. (2013). Manufacturing strategy: a methodology and an illustration. Interfaces, 15(6), 28-46.
Hitt, M. A., Hoskisson, R. E., & Kim, H. (2011). International diversification: Effects on innovation and firm performance in product-diversified firms. Academy of Management journal, 40(4), 767-798.
Kazi, A. (2018, January 23). Opinion: Embrace VAT or be lost. Retrieved from Arabian Business : https://www.arabianbusiness.com/politics-economics/388163-opinion-embrace-vat-or-be-lost
Markides, C. C., & Williamson, P. J. (2013). Related diversification, core competences and corporate performance. Strategic management journal, 15(S2), 149-165.
Miller, D., & Friesen, P. H. (2012). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic management journal, 3(1), 1-25.
Mintzberg, H., & Waters, J. A. (2015). Of strategies, deliberate and emergent. Strategic management journal, 6(3), 257-272.
Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2009). Human Resources Management: Gaining a Competitive Advantage, Tenth Global Edition. McGraw-Hill Education.
Oke, A. (2014). Innovation types and innovation management practices in service companies. International Journal of Operations & Production Management, 27(6), 564- 587.
Pearce II, J. A. (2009). The company mission as a strategic tool. Sloan Management Review (pre-1986), 23(3), 15.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education,
Schrage, M. (2013, October 17). Do Customers Even Care about Your Core Competence? Retrieved from Harvard Business Review : https://hbr.org/2013/10/do-customers-even-care-about-your-core-competence
Subramanian, A., & Nilakanta, S. (2016). Organizational innovativeness: Exploring the relationship between organizational determinants of innovation, types of innovations, and measures of organizational performance. Omega, 24(6), 631-647.
Swink, M., Narasimhan, R., & Wang, C. (2015). Managing beyond the factory walls: effects of four types of strategic integration on manufacturing plant performance. Journal of operations management, 25(1), 148-164.
Vecchiato, R., & Roveda, C. (2010). Strategic foresight in corporate organizations: Handling the effect and response uncertainty of technology and social drivers of change. Technological Forecasting and Social Change, 77(9), 1527-1539.
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