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e development and competitive strategy of the company? Is it in accordance with the goal and long term plan of the company? Is it helpful in improving the efficiency of corporate management as well as reducing costs? Is it typical and helpful to company in carrying out the differentiation strategy? Is it good to the expansion of scope of business?

With the help of those questions, companies can distinguish the core competence from other competence.

After recognizing its core competence, company still needs to take many efforts in building and improving the core competence of a company. Basically, this can be realized through both internal ways as well as external ways. From the perspective of internal ways, companies should cultivate a good and unique corporation culture. Both companies and its staff in every sector should value and concern the cultivation of core competence. It is also of great significance for companies focus on the specialization of a certain field. Innovation is another aspect that should be valued, especially in some technology-based companies. Modern enterprise system also helps in building core competence.

Unlike the internal ways which mainly focus on the company itself and its staff, the external ways shift its focus to the partner and stakeholder. External ways emphasize the efficiency of knowledge ally. Through acquire more knowledge, companies can better adapt to the ever-changing market. Another way is merger and acquisition. Merger and acquisition could have the effect of simply knocking one rival company out of the market. (Brian, 2000) 。

Customer’s views toward the product are the driving force in shaping appropriate product decision. (Art Weinstein, 2004)

No doubt, developing a stable customer base is urgent for every company.

Though, Michael Porter’s five forces model has some defects and is difficult for a company to consider the whole five forces when a company makes strategy, the model still benefits company in several aspects. It proves to be very effective in many aspects, especially in differentiation strategy. Those insights it gives to enterprises prove to be quite practical.

The core competence may cause some obstacles and have limitations for those small-sized companies and new entrants. However, once it is established, core competence can bring a lot of benefits to the company.

All in all, both Porter’s five forces model and core competence theory bring more advantages than disadvantages. Companies can utilize their advantages and evaluate on them to choose a more suitable strategy. Together with other strategies, the five forces model will make enterprises have a better knowledge about market, its opponents as well as itself. The value chain analysis can enhance the ability of companies to compete in the global economy. (Hubert, 2005) Together with it, core competence can easier be identified and companies can concentrate on cultivating core competence in key sessions.

Reference

Ahlstrom, David & Garry D. Bruton (2010) International Management: Strategy and Culture in the Emerging World, South-Western Cengage Learning, p131

Analoui, Farhad & Azhdar Karami (2003) Strategic Management: in Small and Medium Enterprises, Thomas Learning, p83