Download - Bpsm Core Compe. Dist. Channel

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Copyright 2004 South-Western. All rights reserved.

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Resources, Capabilities and Core Competencies

Resources Are a firms assets,

including people and thevalue of its brand name

Represent inputs into afirms production process,

such as:

Capital equipment

Skills of employees Brand names

Financial resources

Talented managers


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Capabilities The foundation of many

capabilities lies in:

The unique skills and

knowledge of a firmsemployees

The functional expertise ofthose employees

Capabilities are often

developed in specificfunctional areas or as partof a functional area


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Examples of

Firms

Capabilities

Table 3.3


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Core Competencies Resources and capabilities that

serve as a source of a firms

competitive advantage:

Distinguish a companycompetitively and reflect itspersonality

Emerge over time through anorganizational process ofaccumulating and learning how todeploy different resources andcapabilities


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Core Competencies

Activities that a firm

performs especially well

compared to competitors

Activities through which the

firm adds unique value to its

goods or services over a long

period of time


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Building Sustainable Competitive

Advantage Four Criteria of

Sustainable

Competitive Advantage

Valuable

Rare

Costly to imitate

Nonsubstituable


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The Four Criteria of Sustainable Competitive Advantage

Valuable Capabilities Help a firm neutralize threats or

exploit opportunities

Rare Capabilities Are not possessed by many others

Costly-to-Imitate Capabilities Historical: A unique and a valuableorganizational culture or brand name

Ambiguous cause: The causes and

uses of a competence are unclear

Social complexity: Interpersonal

relationships, trust, and friendship

among managers, suppliers, andcustomers

Nonsubstitutable Capabilities No strategic equivalentTable 3.4


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Advantage Valuable capabilities

Help a firm neutralize

threats or exploit

opportunities Rare capabilities

Are not possessed by

many others


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Advantage Costly-to-Imitate

Capabilities Historical

A unique and a valuableorganizational culture or

brand name Ambiguous cause

The causes and uses of acompetence are unclear

Social complexity

Interpersonal relationships,trust, and friendship amongmanagers, suppliers, andcustomers


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Advantage Nonsubstitutable

Capabilities

No strategic equivalent


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Outcomes from Combinations of the Criteria for Sustainable

Competitive Advantage

Table 3.5


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Channel and Distribution Tactics

Bucklins definition of distribution

Todays system of exchange

Channel intermediaries

Six basic channel decisions

Selection consideration


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A channel of distribution

comprises a set of institutionswhich perform all of the

activities utilised to move a

product and its title from

production to consumption

Bucklin - Theory of Distribution Channel Structure (1966)


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Negotiation

Promotion

Contact

Transporting and storing

Financing

Packaging

Money

Goods

Todays system of exchange

Producers

Users


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Channel intermediaries - Wholesalers

Break down bulk

buys from producers and sell small quantities to

retailers

Provides storage facilities

reduces contact cost between producer and

consumer

Wholesaler takes some of the marketingresponsibility e.g sales force, promotions


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Channel intermediaries - Agents

Mainly used in international markets

Commission agent - does not take title of the

goods. Secures orders.

Stockist agent - hold consignment stock

Control is difficult due to cultural differences

Training, motivation, etc are expensive


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Channel intermediaries - Retailer

Much stronger personal relationship with the

consumer

Hold a variety of products

Offer consumers credit

Promote and merchandise products

Price the final product Build retailer brand in the high street


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Channel intermediaries - Internet

Sell to a geographically disperse market

Able to target and focus on specific segments

Relatively low set-up costs

Use of e-commerce technology (for payment,

shopping software, etc)


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Six basic channel decisions

Direct or indirect channels

Single or multiple channels

Length of channel Types of intermediaries

Number of intermediaries at each level


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Selection consideration

Market segment - must know the specificsegment and target customer

Changes during plc(product life cycle) - differentchannels are exploited at various stages of plc

Producer-distributor fit - their policies, strategiesand image

Qualification assessment - experience and track

record must be established Distributor training and support


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