Tool Presentation
Core Competencies
Good afternoon, everyone. My topic is “ How the management of core competencies become the real sources of advantage for an organization?’’ I have chosen core competencies as a management tool for my presentation. According to Prehalad & Hamel’s definition, a core competence can be seen as an organization’s collective learning which allows a firm to form the basis for firm-specific and in-imitative competitive advantage. It is also a configuration of fundamental aspects of a company, like resources, skills, knowledge and abilities that differentiate the organization from competitors. As illustrated in literature, we can think of a firm as a tree. Core competencies represent the roots of the tree that enable the firm to sustain its existing SBUs and react to the changes in the external environment. In this sense, core competencies are at the basis of unique value creating strategies that lead to competitive advantages.
Here leaves us the question of why core competencies matter to an organization? I have concluded four main reasons. Firstly, core competencies provide a firm a competitive edge by quickly responding to the dynamics of environment. Secondly, core competencies allow a company to leverage its resources and capabilities to create a superior value in the targeted markets. By leveraging resources, a firm can increase its strength and use them to overcome weakness and take advantage of new opportunities. Thirdly, core competencies work as a part of the knowledge creating system within the firm, which may includes technological knowledge, know-how, expertise and so on. The knowledge helps the top management to reduce uncertainty and facilitate strategy development. Lastly, by identifying its core competencies a firm is able to guide the diversification process. Core competencies enables the company to concentrate on existing business when entering into a new market. Meanwhile, building new core competencies helps the firm to penetrate into emerging markets by developing new products that fit to challenges and demands of these markets.
Lets move on to the case study as chosen for this presentation. After reading an article related to core competencies published by Strategy& consulting team, i decided to choose Wm. Wrigley Jr. Company as my case to analyze in which manner core competencies are applied in an organization. Today, Wrigley has been widely recognized as a leader in confections and the world’s largest manufacturer and marketer of chewing gum. We may all familiar with Wrigley’s products like skittles, Starbust, Extra. The company’s success are based on a collection of its core competencies including innovation, merchandising skills, its ability to build brands globally and its worldwide distribution system. These distinctive capabilities have become the key to Wrigley’ leading position in the gum industry. For many decades, Wrigley relied on these competencies to grow internally and through strategic acquisitions. First of all, Wrigley focuses on continuous innovations on flavors and adding value to existing products. With the understanding of the importance of ability to innovate in particular domains, Wrigley wisely built up capabilities to meet those needs. Committed to the “the spirit of innovation’ in all of its business, Wrigley allocates resources like capital and talent to the improvement of product features, which in return help the company to drive new interest and growth in the gum market. For instance, the launch of Extra Dessert Delights gum allows Wrigley to fill a white space in the gum market and change consumer’s perception of functional gum. This new sub-line is a new-invented 5-calerio per stick gum. By investing on research and know-how technology, the company creates its unique flavors and thus differentiate itself among other competitors.