Business capabilities

Business capabilities also called core competencies of business can be described as ability to achieve specific goals of company. Business capabilities are connected to:

• key resources needed to perform business activities
• important processes and functions
• unique competences of employees and managers
• organizational model used to perform market operations
• relationships with customers and suppliers
• ability to make competitive products
• efficient knowledge management and communication system

In business, you have to measure your strength for intentions.Therefore, it is a good idea to recognize the capabilities of your company even before starting your business. To assess the company's capabilities, you must first know what the company's capabilities are. Simply put - opportunities are advantages thanks to which your company can meet the needs of customers. The American author David Sexton in the book Marketing distinguishes between possibilities and benefits. According to Sexton, "benefits are what customers expect" while opportunities "produce benefits". The author distinguishes three types of possibilities:

• skills - unique abilities, professional experience or specialist knowledge in a given industry
• resources - which the company has at its disposal; these are human, material, financial, infrastructural resources, knowledge resources and imagination
• characteristics - of a given product or service

Intuition in search of business opportunities

There is a fairly common belief that the best in business are those decisions that are made on the basis of intuitions. With the intuition that should be based on knowledge and experience. The same is true when looking for business opportunities. This is art, which on the one hand should be based on a systematic processand methods that allow you to look at customers, competitors or the market in a different way than the standard. This allows you to see those areas that many skip.On the other hand, the application of the method should not be a mechanical or non-reflective action. Sometimes business opportunities are not very obvious, and sometimes they are subject to considerable risk.

Why is it worth recognizing the company's capabilities?

Entrepreneurs do not always appreciate the importance of recognizing the possibilities of their business. Some beginner entrepreneurs count on the fact that their passion and enthusiasm will immediately be given to their clients. Of course, this may happen, but customers do not always share the euphoria of business owners, and then the beginnings of business can be difficult. Recognizing the company's capabilities helps to avoid such situations, because it gives entrepreneurs a number of advantages. Here are the most important of them

• The assessment of the possibilities will allow to meet the clients' needs. Understanding the needs of customers does not mean that all of them have to be implemented. If customers expect pharmaceutical companies to find a rejuvenating drug, that does not mean they have to do it. However, recognizing one's own capabilities will allow entrepreneur to answer the question: to what extent the company is able to meet the needs of its clients.
• The opportunity assessment will determine the location of your company in relation to the competition. Once you evaluate your business opportunities, you will be able to compare them with the possibilities of competitors and thus find out what the company is better than the competition and what should improve.
• The opportunity rating will allow you to determine what market shares you can get. If you realistically evaluate your options, you will be able to estimate whether you will be able to achieve the expected market share. If it turns out that you do not - you'll be able to think about how to increase the company's ability to increase your market share.

Examples of Business capabilities

• Strategic Planning: The ability to develop and implement plans for long-term objectives in a rapidly changing environment.
• Financial Management: The capacity to accurately track and manage financial resources in order to maximize profits and minimize risks.
• Marketing: The ability to identify and reach target audiences, build brand awareness, create competitive advantage, and develop effective marketing strategies.
• Innovation: The capacity to create new products and services that address customer needs and keep a business competitive.
• Leadership: The capacity to motivate and inspire employees, create a cohesive team, and develop a positive work environment.
• Technology: The ability to analyze, design, implement and maintain reliable and cost-effective technical systems that support the organization's goals.
• Customer Service: The capacity to provide exceptional service to customers in order to build loyalty and trust.
• Operations Management: The ability to efficiently manage resources, optimize processes, and maintain quality standards.
• Risk Management: The capacity to identify, assess, and manage potential risks that could impact the success of the business.

Advantages of Business capabilities

Business capabilities are a set of competencies that enable a business to achieve its specific goals. The advantages of business capabilities are:

• Increased Efficiency: Business capabilities enable businesses to streamline their processes by leveraging their resources to maximize their output. This leads to improved productivity, better quality of output, and cost savings.
• Improved Competitiveness: Business capabilities give businesses a competitive edge in the market. They enable companies to better understand their customers and develop strategies to meet their needs.
• Improved Employee Efficiency: Business capabilities help employees to better understand the company’s objectives and how to use their skills and knowledge to reach those objectives. This boosts employee performance and increases job satisfaction.
• Increased Scalability: Business capabilities enable businesses to scale their operations and expand their reach. This leads to better customer service and increased revenue.
• Improved Decision-Making: Business capabilities help companies to make better decisions faster. This leads to better strategies and better outcomes for the business.

Limitations of Business capabilities

Business capabilities are the set of skills and abilities that a business possesses in order to achieve specific goals. However, these capabilities have certain limitations that must be taken into account. These limitations include:

• Limited resources - Businesses may have limited resources such as capital, personnel, and technology, which can limit the scope of their capabilities.
• Lack of expertise - Businesses may lack the expertise needed to execute certain tasks or strategies, preventing them from achieving their goals.
• Limited market knowledge - Businesses may not have a full understanding of their target market, making it difficult to effectively reach their intended audience.
• Inadequate planning - Without careful planning, businesses may struggle to execute their strategies and achieve their goals.
• Inability to adapt - Businesses may be unable to quickly and effectively adapt to changing market conditions or customer demands.
• Regulatory constraints - Depending on the industry, businesses may face regulatory constraints that prevent them from achieving certain goals.

Other approaches related to Business capabilities

This list includes other approaches related to Business capabilities:

• Strategic Planning: This approach involves setting objectives and goals, and planning how to achieve them by allocating resources.
• Business Process Improvement: This approach focuses on streamlining and optimizing existing processes in order to reduce costs and increase efficiency.
• Customer Relationship Management: This approach focuses on managing customer relationships by understanding customer needs and providing tailored solutions.
• Business Intelligence: This approach involves collecting, analyzing, and interpreting data to gain insights into the business.
• Service Orientation: This approach focuses on providing customer-centric services by understanding customer needs and providing tailored solutions.
• Enterprise Architecture: This approach focuses on designing and implementing an integrated and interoperable IT infrastructure that supports the business.

In summary, other approaches related to Business capabilities include strategic planning, business process improvement, customer relationship management, business intelligence, service orientation, and enterprise architecture. These approaches all focus on understanding customer needs and providing tailored solutions in order to optimize existing processes, reduce costs, and improve the business.

Business capabilities — recommended articles

Benefits of strategic management — Strategic management principles — Importance of knowledge — Strategic option — Sustainable competitive advantage — Organizational strategy — Internal analysis — Knowledge gap strategy — Balanced scorecard perspectives

References

• Fleischer, J., Herm, M., & Ude, J. (2007). Business Capabilities as configuration elements of value added networks. Production Engineering, 1(2), 187-192.
• Acar, A. Z., & Zehir, C. (2010). The harmonized effects of generic strategies and business capabilities on business performance. Journal of Business Economics and Management, 11(4), 689-711.
• Barroero, T., Motta, G., & Pignatelli, G. (2010).Business capabilities centric enterprise architecture. In Enterprise architecture, integration and interoperability (p. 32-43). Springer, Berlin, Heidelberg.

Footnotes

Author: Magdalena Lewicka