Analysis on Michael Porter’s Five Forces Model and Core Competence [5]
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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.
competition of the overall strength of companies. In this way, it helps companies reduces the number of competitors and all companies need to do is to focus on those strong competitors. The overall strength of companies can reflect the objective need of long-term development for companies and avoid some strategic mistakes caused by short insight. For P&G, it has a long
history and seeks to retain its high proportion of market share.
Secondly, core competence can strengthen the competitive status of companies in related markets. Core competence is not just a single competence; it is a mix of several factors. Companies that develop a strong core competence usually have a more insightful idea over the market, thus it is relatively easier for them to diversify their business and manufacture other related products.
Last but not least, core competence is accumulated by rich experience and knowledge through a long period. Therefore, it can hardly be attacked, imitated and surpassed.
4.2 Disadvantages of Core Competence
Just as mentioned in the advantages of core competence, the uniqueness of core competence can make the company has distinctive advantages over others, meanwhile, if the company faces with a very strong competitor who also has its own core competence, it will have more obstacles for the company to tackle with.
Generally speaking, core competence can help big companies a lot in their marketing. However, it is a long way to go for small and new entrants of a line. For small-sized companies and new entrants, they have to invest a large sum of money on constructing core competence and it usually takes several years to make the core competence outstanding.
Moreover, small enterprises and new entrants may come across difficulties in recognizing core competence. There are dozens of factors that involved in a business, but not all those factors should be attached great importance to. The main difference between core competence and capacities lies in the recognition of Penrose or any other prior work. (Anders, 2002) So it is a requirement for companies to evaluate these factors as well as evaluate its own business by using the SWOT Analysis. After that, companies can combine those things together and judge which factors they will focus on.
4.3 Measures to take
Concerning the problem that it is not easy for companies to recognize which aspect they should concentrate on, companies have to do a general overview of factors influencing their business most. Companies can compare their own performance with other companies in this line and find out in what aspects they overshadow competitors. After it recognizes those competences, company can further evaluate on them and to test whether those competences have the characteristics of core competence. Companies can using questions to help them judge. Those questions may include: whether the competitive power is suitable to the development and competitive strategy of the company? Is it in accordance with the goal and long term plan of the company? Is it helpful in improving the efficiency of corporate management as well as reducing costs? Is it typical and helpful to company in carrying out the differentiation strategy? Is it good to the expansion of scope of business?
With the help of those questions, companies can distinguish the core competence from other competence.
After recognizing its core comp
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