What is the definition of competitive edge?

An advantage that a firm has over its competitors, allowing it to generate

greater sales or margins and/or retain more customers than its competition.
There can be many types of competitive advantages including the firm's
cost structure, product offerings, distribution network and customer support.

What: is Core Competency?

Core competencies are the most significant value creating skills within your
corporation and key areas of expertise which are distinctive to your company and
critical to the company's long term growth. Your company's core competencies
are the things that you can do better than your competitors in the critical, central
areas of your company where the most value is added to your products. These
areas of expertise may be in any area from product development to employee
dedication.
"A core competency is an area of specialized expertise that is the result of
harmonizing complex streams of technology and work activity." ~ C.K.Prahalad
A competence which is central to your business's operations but which is not
exceptional in some way should not be considered as a core competence, as it
will not generate a differentiated advantage over rival businesses. It follows
from the concept of Core Competencies that resources that are standardized or
easily available will not enable a business to achieve a competitive
advantage over rivals.4

Core Competence vs. Sustainable Competitive Advantage

If a core competence yields a long term advantage to the company, it is said to
be a sustainable competitive advantage.

Defining Your Core Competences

Three Main Characteristics

1. They should make a disproportional contribution to stakeholder value

2. They should open doors to other opportunities
3. They should represent such a unique blend of tacit and explicit
knowledge that it cannot be copied by competitors

What Does the Core Competence Achieve?

1. Enables the creation of new products and services that provide potential
access to a wide variety of markets.

2. Makes a significant contribution to the customer value and enables a

business to deliver a fundamental customer benefits
the perceived customer benefits of the end product.

3. Helps create sustainable competitive advantage as it is competitively

unique and difficult for competitors to imitate.
Creating Sustainable Profits: 9 Questions To Answer

Individual Competencies vs. Core Competencies

Individual competencies stand alone and are generally considered in

isolation. >>>

Core competencies are harmonized, intentional constructions. They are

more than the traits of individuals. Capabilities are considered core if
they differentiate a company strategically. Core competencies are
aggregates of capabilities, where synergy is created that
has sustainable value and broad applicability. That synergy needs to be
sustained in the face of potential competition and must not be specific to
one product or market.

Management+by+walking+around
1. 1. MANAGEMENT BYWALKING AROUNDGET MANAGEMENT OUT OF THE
OFFICE
2. 2. I y o u wa it fo r p e o p le to c o m e to y o u, y o u ll o nlyf g e t s m
a ll p ro ble m s . Yo u m us t g o a nd find the m . The big p ro ble m s a
re whe re p e o p le d o nt re a liz e the y ha ve o ne in the firs t p la c
e . W. Edwards Deming
3. 3. Also called management by wandering around. The purpose of
this exercise is to collect qualitative information, listen to suggestions
and complaints, and keep a finger on the pulse of the organization. In
MBWA practice, managers spend a significant amount of their time
making informal visits to work area and listening to the employees.
Involves direct participation by the managers in the work-related
affairs of their subordinates, in contrast to rigid and
distant management. Unstructured approachWHAT IS MBWA?
4. 4. This technique was marked by personal involvement, good listening
skills and the recognition that everyone in an organization wants to do
a good job In the 1970s, when their company began growing, Bill

Hewlett and Dave Packard created a management style.HOW DID IT

START?
5. 5. Top Things About MBWA1. In 1978 when Tom Peters first heard of
Management by Walking around, he called it the technology of the
obvious.2. Considered to be a leadership technique3. Japanese
managers use a similar strategy called the 3 Gs, which stand for
Genba actual place Genbutsu actual thing Genjitsu actual situation The
3 Gs originated at Honda.
6. 6. Share your dreams with them W atch and listen Ask questions Go
by yourself Do it as often as you can Do it to everyone Guidelines For
MBWA
7. 7. Management by Exception is a "policy by which management
devotes its time to investigating only those situations in which actual
results differ significantly from planned results. The idea is that
management should spend its valuable time concentrating on the
more important items (such as shaping the companys future strategic
course). Attention is given only to material deviations requiring
investigation."
8. 8. Dont be critical Catch them in the act of doing something right
Have fun Bring good news Try out their work Guidelines For MBWA
9. 9. Creates a healthy organization. Makes work less formal.
Refreshes organizational values. Strengthens ability to drive cultural
change for higher organizational performance. Encourages staff to
achieve individual and collective goals. Motivates staff by suggesting
that management takes an active interest in people. Builds trust and
relationships.Benefits
10.
10. talk to much and dont listen enough get put off by early
disappointments are reluctant to be repetitive in their actions and as
such are unwilling to adopt the required leader behaviour dont have
a plan, just stopping by the usual people to say hello lack purpose,
they seem to walk around the business with no specific goal in mind
other than to walk around their businessW Some Managers Fail? hy
11.
11. Management by Walking Around is still practiced today. It is
not seen as much in big corporations, but some small companies
practice it. Two big corporations that do practice it are Hewlett- Packard
and Kingston Technologies. In this era of the www. is there still
room for MBWA?IS MBWA STILL RELEVANT?
12.
12. The series Dirty Jo bs is jus t tha t. I ho s t p e rfo rm s the ts
d is g us ting , s m e lly , m e s s y and sometimes dangerous jobs that
people do. In Und e rc o ve r Bo s s , c o m p a ny e x e c utiv e s wo
rk in d is g uis e a nd und e rc o ve r in the ir o wn firm s to explore how
the company really works, what can be improved, and the challenges
faced by employees. It is the driving force behind the popular TV

reality shows Und e rc o v e r Bo s s , Dirty Jo bs .The Return of

Management byW alking Around
13.
13. MBW is ...Total Success, Big Money and most A of all.....Happy
Employees.
Recommended

Five Forces model is used to analyze competitive environment of the company on the
market. These forces are more aggressive in the mature and aged markets, thus
decreasing the overall profitability of any company playing on such a market.
1.
Competitive rivalry - the competition aggressiveness in the industry.
2.
Threat of substitution - the amount of other alternative products which can be
used to replace company offering.
3.
Threat of new entry - the entry barriers to start the business in the industry.
4.
Buyer power - how the customers are influential and organized to decrease the
product prices.

5.

Supplier power - how the vendors are unique and powerful to keep high prices
for your input materials.

Credit: vichie81 | Shutterstock

Whether you are starting a new business or looking for more insight into your
existing company's prospects, you probably have questions about the
competition. One way to answer those questions is by using Porter's Five
Forces model.
Originally developed by Harvard Business School's Michael E. Porter in 1979,
the five forces model looks at five specific factors that help determine
whether or not a business can be profitable, based on other businesses in
the industry.
"Understanding the competitive forces, and their underlying causes, reveals
the roots of an industry's current profitability while providing a framework for
anticipating and influencing competition (and profitability) over time,"
Porter

wrote in a Harvard Business Review article. "A

healthy industry structure should be as much a competitive concern to

strategists as their companys own position."

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According to Porter, the origin of profitability is identical regardless of

industry. In that light, industry structure is what ultimately drives competition
and profitability not whether an industry produces a product or service, is
emerging or mature, high-tech or low-tech, regulated or unregulated.
"If the forces are intense, as they are in such industries as airlines, textiles,
and hotels, almost no company earns attractive

returns on

investment," Porter wrote. "If the forces are benign, as they are in
industries such as software, soft drinks, and toiletries, many companies are
profitable."

Understanding the Five Forces

Porter regarded understanding both the competitive forces and the overall
industry structure as crucial for effective strategic decision-making. In
Porter's model, the five forces that shape industry competition are:

Competitive rivalry.

This force examines how intense the

competition currently is in the marketplace, which is determined by the

number of existing competitors and what each is capable of doing. Rivalry
competition is high when there are just a few businesses equally selling a
product or service, when the industry is growing and when consumers can
easily switch to a competitors offering for little cost. When rivalry
competition is high, advertising and price wars can ensue, which can hurt a
business's bottom line. Rivalry is quantitatively measured by the
Concentration Ratio (CR), which is the percentage of market share owned by
the four largest firms in an industry.

Bargaining power of suppliers.

This force analyzes how

much power a business's supplier has and how much control it has over the

potential to raise its prices, which, in turn, would lower a business's

profitability. In addition, it looks at the number of suppliers available: The
fewer there are, the more power they have. Businesses are in a better
position when there are a multitude of suppliers. Sources of supplier power
also include the switching costs of firms in the industry, the presence of
available substitutes, and the supply purchase cost relative to substitutes.

Bargaining power of customers.

This force looks at the

power of the consumer to affect pricing and quality. Consumers have power
when there aren't many of them, but lots of sellers, as well as when it is easy
to switch from one business's products or services to another. Buying power
is low when consumers purchase products in small amounts and the seller's
product is very different from any of its competitors.

Threat of new entrants.

This force examines how easy or

difficult it is for competitors to join the marketplace in the industry being

examined. The easier it is for a competitor to join the marketplace, the
greater the risk of a business's market share being depleted. Barriers to
entry include absolute cost advantages, access to inputs, economies of scale
and well-recognized brands.

Threat of substitute products or services.

This

force studies how easy it is for consumers to switch from a business's

product or service to that of a competitor. It looks at how many competitors
there are, how their prices and quality compare to the business being
examined and how much of a profit those competitors are earning, which
would determine if they have the ability to lower their costs even more. The
threat of substitutes are informed by switching costs, both immediate and
long-term, as well as a buyer's inclination to change.

Example of Porter's Five Forces

There are several examples of how Porter's Five Forces can be applied to
various industries online. As an example, stock analysis firm

Trefis looked

at how Under Armour fits into the athletic footwear and apparel industry.

Competitive rivalry

Under Armour faces intense competition from Nike,

Adidasand newer players.

Nike and Adidas, which have considerably larger resources at

their disposal, are making a play within the performance apparel
market to gain market share in this up-and-coming product
category.

Under Armour does not hold any fabric or process patents,

and hence its product portfolio could be copied in the future.

Bargaining power of suppliers

A diverse supplier base limits bargaining power.

In 2012, Under Armour's products were produced by 27

manufacturers located across 14 countries. Of these, the top 10
accounted for 49 percent of the products manufactured.

Bargaining power of customers

Under Armour'scustomers include both wholesale customers

as well as end customers.

Wholesale customers, like Dick's Sporting Goods and the

Sports Authority, hold a certain degree of bargaining leverage, as
they could substitute Under Armour's products with other
competitors' to gain higher margins.

Bargaining power of end customers is lower as Under Armour

enjoys strong brand recognition.

Threat of new entrants

Large capital costs are required for branding, advertising and

creating product demand, and hence this limits the entry of newer
players in the sports apparel market.

However, existing companies in the sports apparel industry

could enter the performance apparel market in the future.

Threat of substitute products

The demand for performance apparel, sports footwear and

accessories is expected to continue, and hence we think this force
does not threaten Under Armour in the foreseeable future.
Trefis has also completed Porter's Five Forces analyses of companies,
including

Facebook, Nike, Coach and Ralph Lauren.

Strategies for success

Once your analysis is complete, it is time to implement a strategy to expand
your competitive advantage. To that end, Porter identified three "generic
strategies"that can be implemented in any industry, and in companies of any
size:

Cost leadership:

In this strategy, your goal is to increase profits by

reducing costs while charging industry-standard prices, or to increase market

share by reducing the sales price while retaining profits.

Differentiation:

This strategy aims to make the company's

products significantly different from the competition, improving their

competitiveness and value to the public. This strategy requires both good
research and development and effective sales and marketing teams.

Focus:

In the focus strategy, businesses select niche markets in which to

sell their goods. This strategy requires intense understanding of the

marketplace, its sellers, buyers and competitors. The use of this strategy

frequently requires the companies to also implement a cost leadership or

differentiation position.
Porter said the new strategy should be executed at the corporate, business
unit and departmental levels. Of these, Porter considered the business unit
most significant.

How does your organization create value?

How do you change business inputs into business outputs in such a way that
they have a greater value than the original cost of creating those outputs?
This isn't just a dry question: it's a matter of fundamental importance to
companies, because it addresses the economic logic of why the organization
exists in the first place.
Manufacturing companies create value by acquiring raw materials and using
them to produce something useful. Retailers bring together a range of
products and present them in a way that's convenient to customers,
sometimes supported by services such as fitting rooms or personal shopper
advice. And insurance companies offer policies to customers that are
underwritten by larger re-insurance policies. Here, they're packaging these
larger policies in a customer-friendly way, and distributing them to a mass
audience.
The value that's created and captured by a company is the profit margin:
Value Created and Captured Cost of Creating that Value = Margin
The more value an organization creates, the more profitable it is likely to be.
And when you provide more value to your customers, you build competitive
advantage.
Understanding how your company creates value, and looking for ways to add
more value, are critical elements in developing a competitive strategy. Michael
Porter discussed this in his influential 1985 book "Competitive
Advantage," in which he first introduced the concept of the value chain.

A value chain is a set of activities that an organization carries out to create

value for its customers. Porter proposed a general-purpose value chain that
companies can use to examine all of their activities, and see how they're
connected. The way in which value chain activities are performed determines
costs and affects profits, so this tool can help you understand the sources of
value for your organization.

Elements in Porter's Value Chain

Rather than looking at departments or accounting cost types, Porter's Value
Chain focuses on systems, and how inputs are changed into the outputs
purchased by consumers. Using this viewpoint, Porter described a chain of
activities common to all businesses, and he divided them into primary and
support activities, as shown below.

Primary Activities
Primary activities relate directly to the physical creation, sale, maintenance
and support of a product or service. They consist of the following:

These are all the processes related to

receiving, storing, and distributing inputs internally. Your supplier
relationships are a key factor in creating value here.
Inbound logistics

These are the transformation activities that

change inputs into outputs that are sold to customers. Here, your
operational systems create value.

Outbound logistics These activities deliver your product or

service to your customer. These are things like collection, storage,
and distribution systems, and they may be internal or external to
your organization.

Marketing and sales These are the processes you use to

persuade clients to purchase from you instead of your
competitors. The benefits you offer, and how well you
communicate them, are sources of value here.

Service These are the activities related to maintaining the

value of your product or service to your customers, once it's been
purchased.
Operations

Support Activities
These activities support the primary functions above. In our diagram, the
dotted lines show that each support, or secondary, activity can play a role in
each primary activity. For example, procurement supports operations with
certain activities, but it also supports marketing and sales with other activities.

This is what the organization does to

get the resources it needs to operate. This includes finding
vendors and negotiating best prices.

Human resource management This is how well a company

recruits, hires, trains, motivates, rewards, and retains its workers.
People are a significant source of value, so businesses can create
a clear advantage with good HR practices.

Technological development These activities relate to managing

and processing information, as well as protecting a company's
knowledge base. Minimizing information technology costs, staying
current with technological advances, and maintaining technical
excellence are sources of value creation.

Infrastructure These are a company's support systems, and

the functions that allow it to maintain daily operations.
Accounting, legal, administrative, and general management are
examples of necessary infrastructure that businesses can use to
their advantage.
Procurement (purchasing)

Companies use these primary and support activities as "building blocks" to

create a valuable product or service.

Using Porter's Value Chain

To identify and understand your company's value chain, follow these steps.

Step 1 Identify subactivities for each primary activity

For each primary activity, determine which specific subactivities create value.
There are three different types of subactivities:

create value by themselves. For example, in a

book publisher's marketing and sales activity, direct subactivities
include making sales calls to bookstores, advertising, and selling
online.

Indirect activities allow direct activities to run smoothly. For the

book publisher's sales and marketing activity, indirect
subactivities include managing the sales force and keeping
customer records.

Quality assurance activities ensure that direct and indirect

activities meet the necessary standards. For the book publisher's
sales and marketing activity, this might include proofreading and
editing advertisements.
Direct activities

Innovation-The process of translating an idea or invention into a good or service that creates value or for
which customers will pay.
To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific
need. Innovation involves deliberate application of information, imagination and initiative in deriving greater
or different values from resources, and includes all processes by which new ideas are generated and
converted into useful products. In business, innovation often results when ideas are applied by
thecompany in order to further satisfy the needs and expectations of the customers.

An organizational structure defines how activities such as task allocation,

coordination and supervision are directed toward the achievement
of organizational aims. It can also be considered as the viewing glass or
perspective through which individuals see theirorganization and its
environment.