The graphic shown in Figure 1 was also provided in the article (Porter, 2008).
Figure 1: Five Forces Model
(Porter, 2008)
This model's effectiveness does not however capture the increasingly critical role of tacit and explicit knowledge in businesses. The tacit knowledge, of the type that is learned from the continual streamlining of core processes, is not easily captured and communicated. It is often called tribal knowledge as this type if intelligence often stays within workgroups where it originates and seldom is captured for broader use. Specific knowledge, or the type of intelligence that can easily be captured and communicated, is often not used to its full potential as well. Studies in the auto industry suggest that knowledge, not products or pricing, is the new competitive advantage (Dyer, Nobeoka, 2000). The Five Forces Model does not recognize how important knowledge is as a competitive force in the definition of competitive advantage and its role in defining competitive rivalries. The bargaining power of knowledge needs to be added as does the threat of falling behind the knowledge curve of an industry. An example of this dynamic is how Intel has continually reinvented itself first into microprocessors and later into entire motherboards, subassemblies for servers and chipsets for enabling networking communications. Knowledge is also critical for the development of trust across a value chain and with customers. The greater the knowledge a company has, the greater it can aspire to be a trusted advisor to customers and a trusted partner with suppliers. Knowledge, a catalyst of growth, deserves inclusion in the Five Forces Model because companies compete more on this dimension that any other. Trust is the new currency and the model needs to be updated to reflect this new focus on how knowledge can enable it.
3. How can a business best leverage its distinctive competencies into competitive advantage?
A business can best leverage its distinctive competencies by first concentrating on the intersection of its unique approach to processes, products and systems. The intersection of these three aspects of a company's business is a path to defining a rare, non-substitutable and highly valuable set of core competencies. The intersection of these three areas also leads to core competencies that are inimitable and nearly impossible to clone or replicate. The reason...
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