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Last week we talked about Globalization..
Traditionally sources of competitive advantages were labor costs, capital costs and raw materials. A global strategy easily overcomes these advantages so we have to look for other sources of competitive advantage.
Idea of a bundle of core competencies that can be used to create an exclusive market position. Core competencies are a value creating system.
Resources: Inputs to a firms production process. Capital Equipment, Employee skill, patents, finance, talented managers. (tangible Vs intangible)
Intangible(Patents, Production Knowledge, Intelligence, Reputation Customer perceptions of quality etc..). 1993 study of 847 CEOs -mentioned 30 different intangible assets. Most important was Reputation for Quality.
Capabilities Ability to employ integrated resources. Amount of knowledge within a firm and the rate at which it is acquired are key to sustaining competitive advantage. E.g. Rapid product development (Honda and Intel); HR (Great training); Manufacturing (Fast rip offs The limited) Distribution (Wal-Mart.
Core Competencies : Capabilities that are rare, valuable, imperfectly imitable (land appreciation, company culture, causally ambiguous, social complexity) and non-substutable are a source of sustained competitive advantage.