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Figure 2.1
The twin sources of
core competences.
Made simple
Core competence (distinctive capability) ¼ superior acquisition and
employment of resources þ superior development of ‘general’
competences
Resource analysis
Analysing resources
When we analyse a company’s resources as part of an internal analy-
sis, several frameworks can be employed to provide a comprehensive
review.
Analysis by category
Firstly, we might, for example, consider them by category: human,
financial, physical or intangible. These resources are then evaluated
quantitatively (how much or how many) and qualitatively (how effec-
tively they are being employed). Much of this analysis is covered in
Chapters 3–5. Physical resources such as buildings and machinery will
typically be audited for capacity, utilization, age, condition, contribu-
tion to output and so on. Materials and stocks can be assessed on the
basis of quality, reliability, availability, number of suppliers, delivery
times and unit costs. Human resources are considered in terms of
numbers, education, skills, training, experience, age, motivation,
wage costs and productivity in relation to the needs of the organiza-
tion.
Analysis by specificity
Secondly, we can analyse resources according to their specificity.
Resources can be ‘more’ or ‘less’ specific. For example, skilled workers
38 Internal analysis Part II
Analysis by performance
Thirdly, resources can be evaluated on the basis of how they contri-
bute to internal and external measures of performance. Internal
measures include their contribution to:
& business objectives and targets – financial, performance and
output measures;
& historical comparisons – measures of performance over time
(e.g. against previous years);
& business unit or divisional comparisons.
Competences
They are more often developed internally but may be acquired exter-
nally or by collaboration with suppliers, distributors or customers.
Competences are distinguished from core competences by the fact
that they do not produce superior performance and by the fact that
they are not distinctive from the competences possessed by other
companies in the industry. On the other hand, competences are
essential for survival in a particular line of business. Competences
also have the potential to be developed into core competences.
Core competences