CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment
Ananya Textiles, a Surat-based fabric maker, finds that its proprietary dyeing technique is valuable, hard for rivals to copy, and cannot be easily substituted, and the firm can use it to win new orders across several product lines. In the language of core competence, which characteristic is mainly shown by the firm's ability to apply the technique across several product lines?
The ability to apply a single dyeing technique across several product lines illustrates extendability. A core competence is extendable when it opens access to a wide variety of markets or products. Inimitability and non-substitutability describe protection from rivals, not the breadth of application across products.
- AExtendability (providing potential access to a wide variety of markets)Correct
- BNon-substitutability
- CInimitability
- DPerishability
Explanation
A core competence is judged by tests such as value to customers, difficulty of imitation and extendability. Using one capability to serve many products or markets is extendability. Inimitability concerns how hard rivals find it to copy, and non-substitutability concerns the absence of alternatives; these are not shown by the multi-line use. Perishability is not a core competence test.
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