January 15, 2017
Today’s world is evolving, everyday is a new day and new scenario in market place. The change has become certainty. The business dynamics are rapidly changing and creating severe competition and Economic Volatility. The powerful way to sustain in the global competition was not visible to many companies till 1980s. Top executives of the corporation tried many tricks to make it happen and survive and the business solutions were restructuring, and decluttering and also included the centralizing the authority and distribution with the fear of failure. Come 1990s, market conditions, the world has become one global village, globalization impacted the way we do business, and the technology dominated the way the we reach our customers and satisfy their needs. The later half of the 20th century the, the industrial revolution marked the beginning of the information age. The executives were put and tremendous pressure to cope up with the new development.
C.K. Prahalad is the professor of Corporate Strategy and International Business at the University of Michigan and Gary Hamel, lecturer in London School of Business policy and management have come up with an brilliant concept called as Core Competency Strategy. It can be defined as, "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace”.
It delivers three critical benefits to the organisation and they include:
1. Access to the global markets through identifying core competencies and de-focusing on non-core activities, thus the capital deployment is on core business.
2. Delivers significant impact on Customer Perceived satisfaction which develops customer loyalty and establishes the Brand Equity.
3. Competitive differentiation which enables the business to negate the risk of imitation. The best example is Apple Technology, iPhone, DELL Distribution Model and many more.
This initiative gave birth to outsourcing and 3PLs and 4PLs. The new thinking started taking shape, manufacturers started managing network upstream and downstream firms supply chain. Supply Chain has become a source of competitive advantage. It is no longer competition between organisations, it is between supply chains. Supply Chain management has acquired battlefield techniques to combat and dominate the competition to deliver competitive advantage to the organisation. The competitive advantage comes in the form Cost leadership and Product differentiation and creating buyer value.
A cost leadership is all about developing cost effective product for the market place, it takes into account economies of scale, and the sourcing strategies without compromising the quality of the product. Product differentiation is about delivering unique product and creating the value for the buyer. Value creation delivers customer loyalty and improve brand equity. The best example being Apple Technology, those who use apple technology, do not mind cost but are specific about the product. To substantiate the statement, let us review the financial performance, apple announced 2016 financial results, and the quarterly revenue and the unique feature of the announcement is that, “we are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter,” said Luca Maestri, Apple’s CFO. “We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program.”
Competitive advantage or core strengths not only apply to corporate, it can be implemented by the individuals in delivering unique value addition and core competency skills to deliver competitive advantage. Like business the employment canvas has undergone vast change undisputed professions such as accountants, machinists, supply chain managers, software developers are being displaced due to lack of value creation and unique contribution to the organisation.
Before sign off, let me summaries, core competency is here to stay whether we like it or not, competitive advantage is going to dominate the world, and finally competitive differentiation and cost competitiveness are two mantras for success. Adopt to the situation or perish into the history!.
January 15, 2017
January 15, 2017
Stories by Vijay Sangam