Analysis on Michael Porter’s Five Forces Model and Core Competence [4]
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关键词:Analysis onMichael Porter’s Five ForcesModel and CoreCompetence管理
摘要:The core competence may cause some obstacles and have limitations for those small-sized companies and new entrants. However, once it is established, core competence can bring a lot of benefits to the company.
All in all, both Porter’s five forces model and core competence theory bring more advantages than disadvantages. Companies can utilize their advantages and evaluate on them to choose a more suitable strategy.
nd development. They aim to gain long term profit and devote themselves to new products. Corporation culture is also important to establish a company’s core competence. Among all those aspects that develop a company’s core competence. The most influential and widely used technique is marketing strategy. Some companies utilize the 4Ps theory i.e. product, price, place, promotion (McCarthy, 1960) to provide products and service to meet customers’ specialized needs. Others may seek competitive advantage through the marketing network. They attach great importance and invest a lot of money and time in product selling, market research, market promotion, technical support and market expansion.
Since there are so many aspects that companies should pay attention to, sometimes it is difficult for companies to distinguish core competence from other capabilities. There are several features of core competence. First, the core competence can provide benefit or meet the ultimate need of its customers. Second, core competence must be unique and hard to be imitated. Third, it should also capable of extending, that is to say, core competence can help company to open other market and can promote company’s competence in other products and service.
For P&G, its core competence mainly lies in its market strategy. P&G develops a multi-brand strategy. As a major manufacture of daily products, its business covers nearly all lines concerning our daily life, ranging from cleaning products to food, paper, medicine and so on. Taking advantage of its sufficient capital, P&G realizes a vertical integration. Though the multi-brand strategy costs more and risks more, it is more flexible and allows P&G fill up its space on supermarket shelves. (Ian, 2010) Through this strategy, P&G establish a stable and good image in customers. Apart from using multi-brand strategy,P&G also practice differentiation strategy. P&G always seeks to develop distinctive features for each of its products. It develops different interest mix to meet various needs of its customers.
The competence that distinguished P&G from other competitors also lies in its ability of establishing its brand value. A good brand name can help companies easily recognized and generate customers’ association as well as reduce promotion costs. Each product of P&G well exemplifies the characteristics of the product and the position. P&G also excels in using knowledge-based marketing to enhance its brand value. Exploiting knowledge into the practice of marketing will help companies constructing successful market brands. (Ian, 2004) During the process of marketing, P&G fully utilizes knowledge and ideas.
All those above marketing strategies used by P&G constitute its core competence. They not only help P&G establish a good image and high reputation in the society and among the public, but also develop a large number of loyal customers as well as retain a high customer satisfaction which make the company gain a sustainable advantage in the daily products line.
4.1 Advantages of Core Competence
Core competence mainly applied by those companies which seek long-term development. Once it is established, core competence can bring a lot of benefits to companies.
First of all, core competence surpasses the concrete product and service and liven the competition among companies up to a higher level that is the
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