GROUP 5

ARNAB DEY (08FT-011)PUSHKAR (08FT-031)

RAHUL MAHESHWARI (08FT-033)RAJEEV VISHWANATH (08FT-034)

ROMIT SANYAL (08FT-040)

Competing Capabilities: the New Rules of Corporate

Strategy

Flow of Presentation

Time: Source of Competitive AdvantageCapabilities: Source of Competitive Advantage

Basic Principles of Capabilities-led Competition Replication of Capabilities across

Geographies Different Businesses

Capabilities based Competition CA of Walmart over Kmart Defending Market Share: Medequip Capabilities led growth of Honda Banc One’s Community Focus versus Wachovia’s Individual

Focus The Capabilties propelled success of Dell The CA of Toyota in the Automotive industry

Time: Source of Competitive Advantage

1980s: Time discovered as source of CA1990s: One piece of far reaching

transformationApplication of Time based CA

Speeding new products to market Manufacturing just in time Responding promptly to customer complaints

Benefits Consistency of product quality Acuity of insight into evolving customer needs Ability of exploit emeerging markets

Capabilities

CapabilitiesA set of business processes which Continuosly deliver value to the customer & Are treated by companies as the primary object of

strategy

Capability-based Competitor Identify their key business processes, Manage them centrally & Invest in them havily looking for a long term payback

Capabilities: Source of Competitive Advantage

Basic Principles of Capabilities-led Competition The building blocks of corporate strategy are not

products and markets but business processes Competitive success depends on transforming a

company’s key processes into strategic capabilities that consistently provide superior value to the customer

Companies create these capabilities by making strategic investments in a support infrastructure that links together and transcends traditional SBUs and functions

Because capabilities necessarily cross functions, the champion of a capabilities-based strategy is the CEO

Replication of Capabilities

Across Geographies Cloning of Business Processes across boundaries/regions Capabilities easier to transfer than more traditional CA Honda’s success outside Japan Walmart’s movement from Southern to Northern USA

Across Business Functions Bigger payoff Two ways

Cloning key Business Processes across Businesses Dealer Management of Honda

Creating flexible & robust Processes to serve multiple Businesses Same inventory-replenishment system across new &

traditionally distinct retail stores in Walmart

Transforming into Capabilities-based Competitior

Shift the strategic framework to achieve aggressive goals Medequip: Linking customer need to customer satisfaction

Organize around the chosen capability and make sure employees have the necessary skills and resources to achieve it Medequip: Abandoned functional structure, created customer sales &

service; overall responsibility for specific customers Make progress visible and bring measurements and

reward into alignment Medequip: Field service employees now measured on particular

customer profitability than on overall service profitabilityDo not delegate the leadership of the transformation

Medequip: Capabilities being cross functional require hands-on guidance by CEO

Kmart Walmart

Product oriented instead of Process oriented

Frequent change of vendors

Leasing and subcontracting of Support systems/various departments

Inventory Replenishment Capability (Cross docking)

Partnership with Vendors

Strategic investment in support system (Dedicated fleet, Private satellite, Video conferencing)

CA of Walmart over Kmart

Kmart Walmart

Growth sought by acquisition of unrelated business

Centralized operational processes (less focus on strategic issues)

Growth rate a function of proper training of associates

Decentralized operational processes, but centralized strategic control

CA of Walmart over Kmart

Wachovia Banc One

Superior returns & growing market share (highest cross-selling)

Capability to understand & serve the needs of individual customers

Focus on transfer of customer-specific info across numerous points of customer contacts

Highest return on assets

Capability to understand & serve the needs of entire communities

Focuses on transfer of best practices across affiliate banks

Banc One versus Wachovia

Wachovia Banc One

The personal banker is empowered to take decisions

Capability embedded in training personal bankers

Capabilities difficult to transfer to new acquisitions

The affiliate president is empowered to take decisions

Capability embedded in corporate MIS and training of senior officers

Capabilities easy to transfer to new acquisitions

Banc One versus Wachovia

The Capabilties propelled success of Dell

Direct model of selling Saving on margin charged by wholesaler and

retailers

Build to Order Inventory remains in Supplier books: Postpone

assembly No warehouse Assembly factories hold inventories for a maximum of

2 days 1 PC built by 1 worker: High traceability and

accountability

The CA of Toyota in the Automotive industry

A model of ‘lean production’

1st to show that built-in quality ('right first time') was cheaper, not more expensive

Kaizen- 'continuous improvement‘

Automation with a human touch

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