Core Competency

Prepared By:
Chandan Kumar Das
1502051

 Definition
Core competencies are the skills, characteristics, and assets that sets a
company apart from competitors. They are the fuel for innovation and the
roots of competitive advantage

Characteristic

Valuable Capabilities help exploit opportunities or neutralize threats in external environment

Rare Capabilities few competitors possess them

Difficult-to-imitate Capabilities other firms cannot easily develop

Nonsubstitutable Capabilities there are no strategic equivalents

Useful to leverage across many products and market

Should be of value to customer

Example 1 - Honda
Honda is known as a leader in engines. Honda produces small snow-blower engines,

lawn-mower engines, car engines, truck engines, race car engines.

Their Core Competencies are

R&D
Financial Resourcing
Manufacturing

They leverage their core competency to create core products which are lightweight,

high revving and reliable engines

 Combination of core competencies has let Honda diversify into business like automobile

motor cycles, power products, Honda jets and robotics

Example 2 Black & Decker

Black & Decker Corporationis anAmericanmanufacturer ofpower tools, accessories,

hardware and home improvement products

Core technological competency pertains to 200 to 600 W electric motors, and this motor

is their core product.All of their end products are modifications of this basic technology

Canon: Competing on Capabilities

Optics Expertise
Led to diversification of markets copy machine, auto focusing camera,

strobe integrated camera home VCR, electronic calculators

Led to Range of products mid range camera,80mm video camera, television

lenses
R&D
Advent of NP which was an alternative to PPC and did not violate any of

Xerox patents
Products like personal copier, laser beam printers, electronic calculators

 Joint Venture
International ventures with companies like HP and Apple computer to sell laser printers
Exported copiers to Kodak
Equity participation in CPF which marketed canon copiers
Joint development with Intel for LSI of Canon copier

Quick to market
Introduced a cross functional program whose purpose was to cut down development

time by 50 percent on a continuous basis

Effective Marketing
Used step be step method perfected in home market than sold internationally

 Low cost Manufacturing

Adhered to tight inventory management, material planning process, Kanban system
Adapted to a waste elimination system which saved Canon a 177 billion yen
Maintained parts commonality between models

Exhaustive Market analysis

After studying distribution of offices in Japan by size, Canon decided to focus on a

segment which Xerox had ignored

This led to the invent of smallest, lightest copier ever sold and created a large which

had never existed

 Synergistic management
Combined the expertise in optics, precision mechanics, electronics and fine chemicals

Close supplier relationship

Strong dealer network with various sales incentive programs, management training ad

social outing

Entrepreneurial Business Unit

Empowered business units to act on their own, free of central controls
Head of each unit was treated as surrogate of CEO to make quick decisions and achieve

targets