Business Simulation Seminar

Core Competenciesand

Competitive Advantage

Core Competencies

Something that a firm can do well and that meets the following three conditions:

1. It provides consumer benefits 2. It is not easy for competitors to

imitate 3. It can be leveraged widely to many

products and markets.

Gary Hamel and C. K. Prahalad in The Core Competence of the Corporation (1990).

Distinctive Competency

A core competency that only a few firms possess

In business, always look for an advantage

A ‘level playing field’ is not a good thing

Examples

Competitive Advantage

A position a firm occupies against its competitors

Comes in two forms: Cost advantage Differentiation advantage

“Sustainable competitive advantage” is position which competitors are not able to duplicate

Examples

Cost Advantage

What data do you look at to see if a business has this?

How can a business take advantage of this?

Does a company in the simulation have this?

Differential Advantage Can be many areas

Product Features, packaging, terms & conditions

Distribution Can you see this in the simulation?

Product features? Distribution? Promotion? Sales? Terms & conditions?

Which are sustainable?

The Big Picture

Succeed with your customers and your profits will be good

Success with customers makes it easier to attract capital

More capital leads to more assets More assets means you can serve

customers better

“Competitive Advantage from the Bottom Up,” Daniel Smith, CapSim Inc.