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What Distinguishes the Successful Firm

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Distinctive Capabilities

Summary of Kay's Distinctive Capabilities. Abstract


How can business strategies add value? What distinguishes the successful firm is the fundamental question in business strategy, and one the most senior managers consistently ask themselves.

Companies with distinctive capabilities have attributes which others cannot replicate, and which others cannot replicate even after they realize the benefit they offer to the company which originally possesses them.

In "Foundations of Corporate Success", John Kay argues that outstanding businesses derive their strength from a distinctive structure of relationships with employees, customers, and suppliers. He explains why continuity and stability in these relationships is essential for a flexible and co-operative response to change.

John Kay says there are three distinctive capabilities a company can have to create added value and achieve competitive advantage through relationships:

  • architecture (a structure of relational contacts within or around the organization with employees and with customers and suppliers)

  • reputation (built up through customer's own experience, quality signals, demonstrations and free trails, warranty, guarantee, word of mouth spreading, association with other brands, staking the reputation once it is established)

  • innovation (provided the innovation is translated to competitive advantage successfully)

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Compare also: Value Disciplines  |  Porter  |  Resource-Based View  |  Parenting Styles  |  Parenting Advantage  |  BCG Matrix  |  Greiner  |  Mintzberg  |  3C's  |  M&A

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