Nourishing

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Presentation 16

• Nourishing
• Company Growth

By Prof. Dr. Zafar U. Ahmed President and
CEO Academy for Global Business Advancement
Inc., Texas AM University at Commerce, Commerce,
Texas, USA
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Thought Starter

• Successful companies do not only react to changes
  in the external environment, but also actively
  seek to create new, internal source of advantage
  around their core competencies.

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Nourishing Company Growth

• Creating the Corporate Core Competencies
• Core competencies is not merely about harmonizing
  streams of technology, but it is also about the
  organization of work and the delivery of value
• For many manufacturers, the goal of the core
  competencies is to build world leadership in the
  design and development of a particular class of
  product functionality
• In the services sector such as banking and
  insurance, increasing competition is generating
  new demands to identify new markets, develop new
  systems, and sell now financial and investment
  products

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Nourishing Company Growth

• 2. From Core Competencies to Core Products
• A dominant position in core products allows a
  company to shape the evolution of applications
  and end markets
• In general, core products are developed by two
  major innovation processes
• Technology Driven
• Production and Design Driven

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Nourishing Company Growth

• 2. From Core Competencies to Core Products
• The Ladder innovation is a linear, step-by-step
  strategy of technology substitution
• i.e. The semiconductor replaced the vacuum tube,
  the CD replaced the Vinyl record
• The Cyclical innovation process, by contrast,
  blends incremental technical improvements from
  several previously separate fields of technology
  to create products that revolutionize markets
• i.e. Fusing mechanical and electronics
  technologies produced the mechatronics
  revolution, which has transformed the
  machine-tool industry

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Nourishing Company Growth

• 3. Commercialization of End products
• In formulating its marketing strategy, a company
  should ask in what specific ways it can obtain a
  competitive advantage.
• The number of differentiation opportunities
  varies by industry
• The Boston Consulting Group distinguishes four
  types of industries based on the number of
  available competitive advantage and their size
• Volume Industry
• Stalemated Industry
• Fragmented Industry
• Specialized Industry

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Nourishing Company Growth

• 3. Commercialization of End products

No. of Approaches to Achieve Advantage Few
Many
Large Small
Size of the Advantage
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Nourishing Company Growth

• 3. Commercialization of End products
• Volume Industry
• It is one in which companies can gain only a
  few, but rather large, advantages
• i.e. The construction equipment industry,, where
  a company can strive for the low-cost position or
  highly differentiated position
• Caterpillar Vs. Komatsu, as a Case in Point

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Nourishing Company Growth

• 3. Commercialization of End products
• Stalemated Industry
• A stalemated industry is one in which there are
  few potential advantages and each is small
• i.e. Steel industry, where it is difficult to
  differentiate the product or lower its
  manufacturing cost.

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Nourishing Company Growth

• 3. Commercialization of End products
• Fragmented Industry
• A fragmented industry is one in which a company
  faces many opportunities for differentiation, but
  each opportunity is small
• i.e. A restaurant can differentiate in many ways
  but end up not gaining a large market share
• Starbucks, as a Case in Point

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Nourishing Company Growth

• 3. Commercialization of End products
• Specialized Industry
• A specialized industry is one in which companies
  face many differentiation opportunities, and each
  differentiation can have a high payoff
• i.e. would be companies making specialized
  machinery for selected market segments
• Virgin Atlantic Airline, as a Case in Point

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Nourishing Company Growth

• 3. Commercialization of End products
• Four Strategies the firm can pursue to enhance
  its competitive advantage
• Changing the Terms of Engagement
• Building Quality and Innovation into Product
• Skillful Positioning
• Cost Containment

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Nourishing Company Growth

• 3. Commercialization of End products
• Four Strategies the firm can pursue to enhance
  its competitive advantage
• Changing the Terms of Engagement
• A company can enhance its competitive advantage
  by refusing to accept the conventional definition
  of industry and segment boundaries
• Watch industry, as a Case in Point

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Nourishing Company Growth

• 3. Commercialization of End products
• Four Strategies the firm can pursue to enhance
  its competitive advantage
• Building Quality and Innovation into Product
• Three strategies that lead to successful
  differentiation and market leadership
• Operational Excellence
• Customer Intimacy
• Product Leadership

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Nourishing Company Growth

• 3. Commercialization of End products
• Four Strategies the firm can pursue to enhance
  its competitive advantage
• Skillful Positioning
• Positioning is the act of designing the
  companys offer and image so that it occupies a
  distinct and valued place in the target
  customers minds
• i.e. Coca Cola as the worlds largest soft-drink
  company, Porsche as one of the worlds best sport
  cars
• Strengthen brand position
• i.e. Were Number Two, We try harder---Avis
• Cost containment
• Apart from differentiation, cost reduction is
  another strategy designed to create a competitive
  advantage for the firm
• Wal-Mart, as a Case in Point

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Nourishing Company Growth

• 4. Penetrating the Global Market
• Market penetration could be executed by
• Selecting Markets
• Entering Markets
• Building Market Share
• Protecting Leadership Positions

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In Conclusion

• Successful firms do not merely react to changes
  in external environment many concentrate their
  business portfolio around the companys core
  competencies and actively seek to create new,
  internal sources of advantage