CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment
Kaveri Foods has a patented spice-blending process that competitors cannot copy easily, and it uses this to offer distinctive products at lower cost than rivals. According to Prahalad and Hamel, which test of a core competence is the process meeting when it can be used across many different products and markets?
The process meets the test that a core competence provides potential access to a wide variety of markets. Being usable across many products and markets shows breadth of application, which is distinct from being hard to imitate or from merely meeting threshold capability needs.
- ADifficult to imitate
- BProvides potential access to a wide variety of marketsCorrect
- CContributes to perceived customer benefit
- DIs a threshold capability
Explanation
Core competencies are judged by tests such as access to varied markets, contribution to customer benefit, and difficulty of imitation. Use of one capability across many products and markets is the market-access test. Difficulty of imitation concerns copying by rivals, and threshold capabilities are only the minimum needed to compete.
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