Amazonevolution

Core Competency TO: Professor Greg Waller FROM: Jim Kovach May 31, 2001 MEMO TO: Professor Greg Waller FROM: Jim Kovach SUBJECT: Core Competency DATE: May 31, 2001 Core Competency Core competencies are not like competitive advantages. Competitive advantages separate companies for a short period of time until all the companies share the same advantage. Core competencies may span many years after continued development. Identifying core competencies There are three characteristics that identify core competencies. First, a core competence will make a company able to grow across different fields. For example, Sony was able to expand on their small compact items like handheld televisions, or Discmans by creating an atmosphere of sharing among technicians in the company. This core competency led to a competitive advantage over Sony’s rivals for being able to produce miniature items that worked as good or even better than larger competitor products across diverse markets. A second characteristic includes the ability to contribute to the customers assumed benefits of the product or service. Sony was able to let individuals enjoy music through handheld Walkmans. This was seen as an enormous benefit to people taking long plane trips, or short walks. Finally a core competency should be difficult for a rival to imitate. Competitors were able to copy certain miniature items, but not able to copy Sony’s technological superiority and ability to change items quickly to fit customer needs. Why you need core competencies The ability to enter new or old markets depends on the company’s ability to build on core competencies. Divesting in certain business aspects could hurt the company down the road. Sony’s Betamax was not good for the company at the time, but later helped them in markets of 8mm tapes and even camcorders. If core competencies are not created over time, then the company cannot grow. The company will not be able to create their own market or niche in an existing market. These core competencies must be planned and thought out as to where markets are heading in the future. Vision A good vision is comprised of two components, core ideology and envisioned future. These two components give a company direction as to what the company is focused on doing and where the focus should shift in the future. Core ideology/Envisioned future Core ideology entails core values and core purpose. Core values are the strict guidelines that a company follows because of the important implications the values hold. Amazon.com’s core values are to treat every customer with great service so the customer feels welcome, wanted and trusts Amazon.com. This principle is important to Jeff Bezos because he wants the customer to feel respected. Core purpose is the companies overall reason for existing. Amazon.com’s core purpose is to offer everything it can to their customers. This purpose is so the customer does not have to go anywhere else but to only one amazing website. Core competency and vision Both core competency and a company’s vision are two essential ideas that enable a company to succeed and grow in time. The company must have a vision of where it is heading and included should be how core competencies will be developed. These ideas must be educated to every employee of the company from top management to warehouse workers in order for the company to be the best it can be. Amazon.com’s core competency and vision Amazon.com’s core competency lies within their systems. The vision of the company is to operate for the customers. Amazon.com’s systems enable them to offer the customer almost anything through their website. Their core competency is developed through their overall vision of what customers want now and in the future. By using these two ideas in conjunction with one another, Amazon.com will be able to survive among competitors who do not see the future clearly.