Answer to Question #297536 in Marketing for JAHID

Question

Multinational companies increasingly capitalized on their resources and capabilities in enhancing their competitiveness. Evaluate the main categories of capabilities of some of these companies that enabled them to compete in global markets. (250 Words)

Answer 1

 Strategic Capabilities

These are capabilities that enable the company to have competitive differentiation. It involves changing the existing or acquiring new capabilities. For example, organizations embarking on inorganic development ought to have strong "Corporate Development" and "Merger Integration" capabilities. On the contrary, "Supply Chain Networks" may be critical for manufacturing organizations. Core Capabilities: Core capabilities are inherent in the company's existence. For multi-brand organizations such as Procter & Gamble or Unilever, a competence such as "Product Management" is critical to their survival. "Design and Industrial Engineering," on the other hand, are fundamental competencies for a company like Sharper Image. Furthermore, "Recruitment" and "Training" are important competencies for professional services firms.

 Context Capabilities

Context competencies are critical for getting things done for an organization. Context capabilities are transactional services that are often underutilized but come to light when they fail. Finance and accounting, for example, are key context competencies for the majority of businesses. When there is a gap or a problem with compliance, this capability becomes an issue. For example, when a company wants to improve and minimize the time it takes to "Close Process," or when a regulatory agency dings the company's reputation, it becomes a candidate for transformation.

Foundational or Commodity Capabilities:

All other capabilities that provide no significant value but are required to function may be classified as Foundational or Commodity capabilities. The primary approach for core or commodity capabilities is to reduce operational costs, so standardization and business process outsourcing become optimization levers. For example, a commodity capability could be "Accounts Payable," where the value-add cuts costs and keeps a consistent operation.