how the organisation can exploit its strengths to achieve sustainable competitive advantage

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According to Johnson, Scholes and Whittington (2008), core competencies refers to “the skills and abilities by which resources are deployed through an organisation’s activities and processes such as to achieve competitive advantage in ways that others cannot imitate or obtain”. Developed by Hamel and Prahalad in 1990, simply stated, (a) it provides customers with major benefits, (b) it is difficult to imitate and (c) it can be leveraged in many products and markets. Differentiated from regular competencies and capabilities, Hamel and Prahalad (1990) highlighted the underlying role of a core competence. They likened the diversified corporation to a tree, with the branches and canopy representing the wide range of end product in the various…show more content…
To this end, the government is considering incentives to encourage the consumers to purchase new vehicles. Such governmental interest in the auto industry thus provides favourable conditions for both local and foreign auto manufacturers and suppliers in China.

Economic Environment:

According to a web article posted by The Economist online on Dec 27th 2011, “over the past ten years, real GDP growth averaged 10.5% a year in China and 1.6% in America; inflation (as measured by the GDP deflator) averaged 4.3% and 2.2% respectively”. Foreign direct investments have also been on the rise over the last decade, and consumer spending has been strong. Statistics provided in the case study by Farhoomand and Huang, 2010 show huge annual increases in car sales in China versus the rest of the world. As the world’s 2nd largest automobile producer and market (Farhoomand and Huang, 2010) and with its large population and booming economy, China is a key market for foreign companies, and particularly those in the car industry.

Social / Cultural Environment:

The Chinese population tends to be patriotic and strongly rooted in their culture, which is reflected in their preference for locally-made products. There is a strong sense of family, group and community, hence being highly influenced by their
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