BUSINESS STRATEGY

Business Strategy

Business strategy

Introduction

In order to survive the intense competition in contemporary era, it is immensely important that an organization has the knowledge, skills, technology, and relationships that enable it to stand in the industry. If these knowledge, skills, technology, and relationships are held common by other players in the industry, they are refereed as competencies; however, if they enable an organization to give improved performance than the competitors, and are also not possessed by others in the industry, they are referred as core competencies. Core competencies are unique to an organization; they are complex and cannot be easily copied by other players in the market. They are usually possessed by companies, which perform better than the competitors (Stonehouse, Campbell and Houston, 2002, p 38).

However, businesses need to be cautious in the way they use their core competencies as being over confident about their capabilities can be hazardous. This concept was explained by Miller in 1992 as Icarus Paradox. According to him, any competency providing with benefits and success in the initial stages can also lead to risks in future. When businesses use their competencies to make developments, they should also consider the dangers associated with them. If businesses fail to recognize their dangers and continue to believe on their ability to succeed, they are likely to experience failure (Vermeulen, 2011).

Discussion and Analysis

Core competencies can provide organizations with numerous advantages. If Core competencies are properly utilized, they can lead to the enhancements of an organizations functions increasing it credibility in the industry. The outcomes of each core competency should be analyzed carefully so that an organization is aware of the impact that it will have on other payers of the industry. In the short run, core competencies enable an organization to delivers products that can satisfy consumers needs and also serves as a variable to keep the product prices low. In the long run, core competencies enable an organization to adjust to the changes that occur in the external environment.

For example, in case of developments, unique skills and technology possessed by an organization can enable it to have an edge over its competitors. Core competences can enable an organization to have economic advantages over a large scale. For example an innovative technology can help an organization to manufacture products with less input and provide the customers with a product similar to or improved than the other products available in the market at a low cost. Core competencies enhance over time, however the success of these competencies lie in the way an organization harmonizes then across the various processes (Kumar, 1998, P.158).

Another advantage of core competencies is that they cannot be copied easily. Hence, it provides customers value. For example, Microsoft possesses expertise in several IT based innovations where, because of several reasons, it is hard for competitors to duplicate or vie with Microsoft's core competences. Regardless of the several advantages that core competencies have, they also possess some disadvantages. As large businesses comprise several kinds of departments and ...