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Unit 2: Strategic Planning

leverage the strategy of the company. Having the discipline to keep the list pared to a few Notes
highly valued competencies will increase the company’s focus on the important activities and
add to the value of these distinctive competencies.
While the core competencies vary by industry and by company, following is a selected list of
skills, processes or systems that might be considered as core competencies:

Table 2.1: List of Core Competencies

Service Levels Design
Efficient Systems Product Innovation
Product Development Marketing
Supply Chain Speed to Market
Sales Force Customer Service
Technology Strategic Alliances
Manufacturing Practices Engineering

The more unique and the better the company performance is on its own list of core competencies
the more unlimited the economic value will be for the company and for the customer. The
reverse is also important, that is, the more similar the company competencies are to its direct
competitors the lower the economic value for the company. The more distinctiveness and
uniqueness can be built into the company core competencies the more market leverage and
margin performance the company can anticipate. And, in addition, more customer loyalty will
also develop. Another advantage of developing a short list of distinctive, unique core
competencies is that it will lead to improved access to new markets and success in new products.
These benefits further leverage the well-developed competence list.
The final steps in this part of the analysis are to prioritise every activity or function; and, also to
assign a dollar value or dollar cost to each activity. This step allows the company to focus on
those competencies that avoid cost and bring the most value to the business. The analysis of
Core Competence creates a realistic view of the skill sets, processes and systems the company is
uniquely good at performing. It helps to generate focus on the value adding activities. And,
finally it helps in the decision process used to determine which activities are candidates for
outsourcing.

Key Success Factors

Key success factors are those functions, activities or business practices, defined by the market
and as viewed by the customer that is critical to the vendor/customer relationship.

Key success factors are defined by the market and by the customer, not by the company. They
revolve around skills, processes and systems. Outstanding performance in those areas results in
“order winners”.
Core competencies focused on the internal activities, practices and functions. When these
competencies are aligned with the Key Success factors the value of the business relationship
blossoms and grows for the benefit of both the company and the customer.
Another way to think of Key Success Factors is to view the business from the market and
customer perspective. What functions, activities or business practices are valued and demanded
by the market conditions and by the customer needs? What is it that the company must do to
compete in the market and to be perceived by the customer as adding value to the business
relationship? What factors are important in the customer decision process that generates an
order? Why does the customer select your company over the competition?

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