Honda: Operations Based Core Competence

HONDA: Operations-based core competence

The resource-based view argues that companies posses some unique resources (assets and capabilities) and competitive advantage is acquired by accumulating those strategic assets. Resources are any tangible (e.g. equipment, raw material) or intangible (e.g. firm image, processes, routines) things that a company owns and can use to carry out its crucial processes. Capabilities, are dynamic of a “doing” nature. Capabilities are “the ability of make use of resources to perform some task or activity”, for example Kodak’s capability in imagining application.

Furthermore, the competence-based perspective argues that it is the core competences of a firm, which are the source of sustainable competitive advantage. “Core competences” are usually the result of “collective learning” processes and are manifested in business activities and processes. As suggested by some authors for a competence to be a “core competence”, it must have 3 particular attributes. Rareness or uniqueness, refers to the degree to which a particular capability is distinctive. This can also be as a result of the rarity of the resources that compose that competence and of the rarity of the perceived value owing to the particular configuration of the resources. Inimitability: the degree to which a particular capability is inimitable by competitor, it must be difficult to transfer, difficult to find a substitute for, and difficult o imitate. Non-substitutability: the degree to which a particular capability cannot be replaced by other resources or capabilities, therefore, it is better that they be difficult to substitute

However, many authors have questioned that “being unique in competition” is not the sufficient criteria for sustaining competitive advantage in dynamic environment. It is argue that competitive advantage may be loss due to technological or social changes taking place in markets. Examples are the computer, semiconductor, aerospace and steel where a less dynamic “core competence” may quite easily turn it into “core rigidity” tomorrow. On the basis of that many authors argue that core competences must have the potential for continuous upgrading and development. Therefore, firms with superior dynamic efficiencies