Core competencies are those capabilities that are critical to a business achieving competitive advantage. The starting point for analysing core competencies is recognising that competition between businesses is as much a race for competence mastery as it is for market position and market power. Senior management cannot focus on all activities of a business and the competencies required to undertake them. So the goal is for management to focus attention on competencies that really affect competitive advantage.
The main ideas about Core Competencies were developed by C K Prahalad and G Hamel. The central idea of core competency was that over time companies may develop key areas of expertise which are distinctive to that company and critical to the company's long term growth.
The core areas of expertise may be in any area but are most likely to develop in the critical, central areas of the company where the most value is added to its products.
Core Competencies are not seen as being fixed. Core Competencies should change in response to changes in the company's environment which is constantly changing. They are flexible and evolve over time. As a business evolves and adapts to new circumstances and opportunities, so its Core Competencies will have to adapt and change.
Identifying Core Competencies
Prahalad and Hamel suggest three factors to help identify core competencies in any business:
a. Provides potential access to a wide variety of markets: -
The key core competencies here are those that enable the creation of new products and services.
b. Makes a significant contribution to the perceived customer benefits of the end product: - Core competencies are the skills that enable a business to deliver a fundamental customer benefit.
c. Difficult for competitors to imitate: - A core competence should be "competitively unique" where the product is difficult to imitate.
Resources that are standardised or easily available will not enable a business to achieve a competitive advantage over rivals.
Saturday, July 30, 2011
Monday, July 18, 2011
Critical Success Factors (CSF)
Critical Success Factors are the essential areas of activity that must be performed well if organization wants to achieve their mission, objectives or goals for your business or project.
Critical Success Factors helps to create a common point of reference to help you direct and measure the success of your business or project. As a common point of reference, CSFs help everyone in the team to know exactly what's most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims.
The idea of CSFs was first presented by D. Ronald Daniel in the 1960s. It was then built on and popularized a decade later by John F. Rockart, of MIT's Sloan School of Management, and has since been used extensively to help businesses implement their strategies and projects.
Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."
Critical Success Factors are strongly related to the mission and strategic goals of your business or project. Whereas the mission and goals focus on the aims and what is to be achieved, Critical Success Factors focus on the most important areas and get to the very heart of both what is to be achieved and how you will achieve it.
Below are the summary steps that will help you identify the CSFs for your business or project:
Step One: Establish your business's or project's mission and strategic goals.
Step Two: For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?"
Step Three: Evaluate the list to find the absolute essential elements for achieving success – these are your Criticial Success Factors. As you identify and evaluate CSFs, you may uncover some new strategic objectives or more detailed objectives. So you may need to define your mission, objectives and CSFs iteratively.
Step Four: Identify how you will monitor and measure each of the CSFs
Step Five: Communicate your CSFs along with the other important elements of your business or project's strategy.
Step Six: Keep monitoring and reevaluating your CSFs to ensure you keep progressing towards your aims. Indeed, whilst CSFs are sometimes less tangible than measurable goals, it is useful to identify as specifically as possible how you can measure or monitor each one.
To make sure you consider all types of possible CSFs, you can use Rockart's CSF types as a checklist.
•Industry – these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
•Environmental – these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category.
•Strategic – these factors result from the specific competitive strategy chosen by the organization. The way in which the company chooses to position themselves, market themselves, whether they are high volume low cost or low volume high cost producers, etc.
•Temporal – these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs
Source: www.mindtools.com
Critical Success Factors helps to create a common point of reference to help you direct and measure the success of your business or project. As a common point of reference, CSFs help everyone in the team to know exactly what's most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims.
The idea of CSFs was first presented by D. Ronald Daniel in the 1960s. It was then built on and popularized a decade later by John F. Rockart, of MIT's Sloan School of Management, and has since been used extensively to help businesses implement their strategies and projects.
Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."
Critical Success Factors are strongly related to the mission and strategic goals of your business or project. Whereas the mission and goals focus on the aims and what is to be achieved, Critical Success Factors focus on the most important areas and get to the very heart of both what is to be achieved and how you will achieve it.
Below are the summary steps that will help you identify the CSFs for your business or project:
Step One: Establish your business's or project's mission and strategic goals.
Step Two: For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?"
Step Three: Evaluate the list to find the absolute essential elements for achieving success – these are your Criticial Success Factors. As you identify and evaluate CSFs, you may uncover some new strategic objectives or more detailed objectives. So you may need to define your mission, objectives and CSFs iteratively.
Step Four: Identify how you will monitor and measure each of the CSFs
Step Five: Communicate your CSFs along with the other important elements of your business or project's strategy.
Step Six: Keep monitoring and reevaluating your CSFs to ensure you keep progressing towards your aims. Indeed, whilst CSFs are sometimes less tangible than measurable goals, it is useful to identify as specifically as possible how you can measure or monitor each one.
To make sure you consider all types of possible CSFs, you can use Rockart's CSF types as a checklist.
•Industry – these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
•Environmental – these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category.
•Strategic – these factors result from the specific competitive strategy chosen by the organization. The way in which the company chooses to position themselves, market themselves, whether they are high volume low cost or low volume high cost producers, etc.
•Temporal – these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs
Source: www.mindtools.com
Six Principles of Blue Ocean Strategy
There are six main principles that guide companies through the formulation and execution of their Blue Ocean Strategy in a systematic risk minimizing and opportunity maximizing manner.
The first four principles address Blue Ocean Strategy formulation:
1. Reconstruct market boundaries. This principle identifies the paths by which managers can systematically create uncontested market space across diverse industry domains, hence attenuating search risk. It teaches companies how to make the competition irrelevant by looking across the six conventional boundaries of competition to open up commercially important blue oceans. The six paths focus on looking across alternative industries, across strategic groups, across buyer groups, across complementary product and service offerings, across the functional-emotional orientation of an industry, and even across time.
2. Focus on the big picture, not the numbers. Illustrates how to design a company's strategic planning process to go beyond incremental improvements to create value innovations. It presents an alternative to the existing strategic planning process, which is often criticized as a number-crunching exercise that keeps companies locked into making incremental improvements. This principle tackles planning risk. Using a visualizing approach that drives managers to focus on the big picture rather than to be submerged in numbers and jargon, this principle proposes a four-step planning process whereby you can build a strategy that creates and captures blue ocean opportunities.
3. Reach beyond existing demand. To create the greatest market of new demand, managers must challenge the conventional practice of aiming for finer segmentation to better meet existing customer preferences. This practice often results in increasingly small target markets. Instead, this principle shows how to aggregate demand, not by focusing on the differences that separate customers but by building on the powerful commonalities across noncustomers to maximize the size of the blue ocean being created and new demand being unlocked, hence minimizing scale risk.
4. Get the strategic sequence right. This principle describes a sequence which companies should follow to ensure that the business model they build will be able to produce and maintain profitable growth. When companies meet the sequence of utility, price, cost and adoption requirements, they address the business model risk and the blue ocean idea they created will be a commercially viable one.
The remaining two principles address the execution risks of Blue Ocean Strategy.
5. Overcome key organizational hurdles. Tipping point leadership shows managers how to mobilize an organization to overcome the key organizational hurdles that block the implementation of a blue ocean strategy. This principle deals with organizational risk. It lays out how leaders and managers alike can surmount the cognitive, resource, motivational, and political hurdles in spite of limited time and resources in executing blue ocean strategy.
6. Build execution into strategy. By integrating execution into strategy making, people are motivated to act on and execute a blue ocean strategy in a sustained way deep in an organization. This principle introduces, what Kim & Mauborgne call, fair process. Because a blue ocean strategy perforce represents a departure from the status quo, fair process is required to facilitate both strategy making and execution by mobilizing people for the voluntary cooperation needed to execute blue ocean strategy. It deals with management risk associated with people's attitudes and behaviors.
Article Source: www.blueoceanstrategy.com
Picture Source: http://www.ecomaxmc.com/blog/?p=10
The first four principles address Blue Ocean Strategy formulation:
1. Reconstruct market boundaries. This principle identifies the paths by which managers can systematically create uncontested market space across diverse industry domains, hence attenuating search risk. It teaches companies how to make the competition irrelevant by looking across the six conventional boundaries of competition to open up commercially important blue oceans. The six paths focus on looking across alternative industries, across strategic groups, across buyer groups, across complementary product and service offerings, across the functional-emotional orientation of an industry, and even across time.
2. Focus on the big picture, not the numbers. Illustrates how to design a company's strategic planning process to go beyond incremental improvements to create value innovations. It presents an alternative to the existing strategic planning process, which is often criticized as a number-crunching exercise that keeps companies locked into making incremental improvements. This principle tackles planning risk. Using a visualizing approach that drives managers to focus on the big picture rather than to be submerged in numbers and jargon, this principle proposes a four-step planning process whereby you can build a strategy that creates and captures blue ocean opportunities.
3. Reach beyond existing demand. To create the greatest market of new demand, managers must challenge the conventional practice of aiming for finer segmentation to better meet existing customer preferences. This practice often results in increasingly small target markets. Instead, this principle shows how to aggregate demand, not by focusing on the differences that separate customers but by building on the powerful commonalities across noncustomers to maximize the size of the blue ocean being created and new demand being unlocked, hence minimizing scale risk.
4. Get the strategic sequence right. This principle describes a sequence which companies should follow to ensure that the business model they build will be able to produce and maintain profitable growth. When companies meet the sequence of utility, price, cost and adoption requirements, they address the business model risk and the blue ocean idea they created will be a commercially viable one.
The remaining two principles address the execution risks of Blue Ocean Strategy.
5. Overcome key organizational hurdles. Tipping point leadership shows managers how to mobilize an organization to overcome the key organizational hurdles that block the implementation of a blue ocean strategy. This principle deals with organizational risk. It lays out how leaders and managers alike can surmount the cognitive, resource, motivational, and political hurdles in spite of limited time and resources in executing blue ocean strategy.
6. Build execution into strategy. By integrating execution into strategy making, people are motivated to act on and execute a blue ocean strategy in a sustained way deep in an organization. This principle introduces, what Kim & Mauborgne call, fair process. Because a blue ocean strategy perforce represents a departure from the status quo, fair process is required to facilitate both strategy making and execution by mobilizing people for the voluntary cooperation needed to execute blue ocean strategy. It deals with management risk associated with people's attitudes and behaviors.
Article Source: www.blueoceanstrategy.com
Picture Source: http://www.ecomaxmc.com/blog/?p=10
Friday, July 8, 2011
The Marketing Environment - Environmental Forces Affecting Marketing
The marketing environment involves factors that, for the most part, are beyond the control of the company. Thus, the company must adapt to these factors. It is important to observe how the environment changes so that a firm can adapt its strategies appropriately to meet the needs and wants of the target markets.
Some of the environmental forces includes: -
Competition: Competitors often “creep” in and threaten to take away markets from firms. Note that while competition may be frustrating for the firm, it is good for consumers. Competition today is increasingly global in scope.
Economics: Some firms in particular are extremely vulnerable to changes in the economy. Consumers tend to put off buying a new car, going out to eat, or building new homes in bad times. In contrast, in good times, firms serving those needs may have difficulty keeping up with demand. In short, economic boom and bust affects demand for goods and services across different market segments.
Political: Businesses are very vulnerable to changes in the political situation. For example, because consumer groups lobbied the Parliament, more stringent rules were made on the terms of car leases. The tobacco industry is currently the target of much negative attention from government and public interest groups.
Legal: Firms are very vulnerable to changing laws and changing interpretations by the courts. McDonald’s, for example, has been sued by people who claim that eating the chain’s hamburgers caused them to get fat. Some impacts of the legal environment:
Firms are significantly limited in what they can do by various laws—some laws, for example, require that disclosures be made to consumers on the effective interest rates they pay on products bought on installment.
Changes in government's regulations and rules related to import and export of goods may have impact on firms across all sectors in the market.
Technological: Changes in technology may significantly influence the demand for a product. For example, the Internet is a major threat to travel agents.
Social: Changes in customs or demographics greatly influence firms. More women work outside the home today, so there is a greater demand for prepared foods. There are more unmarried singles today. This provides opportunities for some firms (e.g., fast food restaurants) but creates problems for others (e.g., manufacturers of high quality furniture that many people put off buying until marriage). Today, there are more “blended” families that result as parents remarry after divorce. These families are often strapped for money but may require “duplicate” items for children at each parent’s residence.
Some of the environmental forces includes: -
Competition: Competitors often “creep” in and threaten to take away markets from firms. Note that while competition may be frustrating for the firm, it is good for consumers. Competition today is increasingly global in scope.
Economics: Some firms in particular are extremely vulnerable to changes in the economy. Consumers tend to put off buying a new car, going out to eat, or building new homes in bad times. In contrast, in good times, firms serving those needs may have difficulty keeping up with demand. In short, economic boom and bust affects demand for goods and services across different market segments.
Political: Businesses are very vulnerable to changes in the political situation. For example, because consumer groups lobbied the Parliament, more stringent rules were made on the terms of car leases. The tobacco industry is currently the target of much negative attention from government and public interest groups.
Legal: Firms are very vulnerable to changing laws and changing interpretations by the courts. McDonald’s, for example, has been sued by people who claim that eating the chain’s hamburgers caused them to get fat. Some impacts of the legal environment:
Firms are significantly limited in what they can do by various laws—some laws, for example, require that disclosures be made to consumers on the effective interest rates they pay on products bought on installment.
Changes in government's regulations and rules related to import and export of goods may have impact on firms across all sectors in the market.
Technological: Changes in technology may significantly influence the demand for a product. For example, the Internet is a major threat to travel agents.
Social: Changes in customs or demographics greatly influence firms. More women work outside the home today, so there is a greater demand for prepared foods. There are more unmarried singles today. This provides opportunities for some firms (e.g., fast food restaurants) but creates problems for others (e.g., manufacturers of high quality furniture that many people put off buying until marriage). Today, there are more “blended” families that result as parents remarry after divorce. These families are often strapped for money but may require “duplicate” items for children at each parent’s residence.
Wednesday, July 6, 2011
Service Marketing
What is Service Marketing?
Services marketing is marketing based on relationship and value. It may be used to market a service or a product.
What are the characteristics of Service Marketing?
1.The buyer purchases are intangible
2.The service may be based on the reputation of a single person
3.It's more difficult to compare the quality of similar services
4.The buyer cannot return the service
5.Service Marketing mix adds 3 more p's, i.e. people, physical environment, process
When one markets a service business, one must keep in mind that reputation, value, delivery of service and follow-through are keys to a successful marketing.
Why Service Marketing is Important Today?
1. It helps to establish better relationship with customers
2. As service is intangible, the challenge for the service marketer is to somehow make her services stand out from the crowd. Because service marketing is so prolific, marketers must think of ways to communicate the benefits of the service they offer in language that reflects consumer need and value.
3. Service marketing enable customers to provide feedback for firms to continuously improve services in order to stay competitive.
4. Service marketing helps to retain customers and creates loyalty.
Services marketing is marketing based on relationship and value. It may be used to market a service or a product.
What are the characteristics of Service Marketing?
1.The buyer purchases are intangible
2.The service may be based on the reputation of a single person
3.It's more difficult to compare the quality of similar services
4.The buyer cannot return the service
5.Service Marketing mix adds 3 more p's, i.e. people, physical environment, process
When one markets a service business, one must keep in mind that reputation, value, delivery of service and follow-through are keys to a successful marketing.
Why Service Marketing is Important Today?
1. It helps to establish better relationship with customers
2. As service is intangible, the challenge for the service marketer is to somehow make her services stand out from the crowd. Because service marketing is so prolific, marketers must think of ways to communicate the benefits of the service they offer in language that reflects consumer need and value.
3. Service marketing enable customers to provide feedback for firms to continuously improve services in order to stay competitive.
4. Service marketing helps to retain customers and creates loyalty.
Subscribe to:
Posts (Atom)