TASK 1: ENVIRONMENTAL SCANNING 161

and. experience which is a result or outcome of the accumulation of

learning over time and gradual buildup of real profrciency in
performing an activitY.
Having competency involves deliberate efforts to develop the
ability to do something resulting from doing any of the following
activities:
a) selection of people with requisite knowledge and
expertise;
b) upgrading or expanding individual abilities;
c) moldingwork products of individuals into a cooperative
effort to create organizational ability; and
d) a conscious effort to create intellectual capital'
Often, a core competence results from collaboration among
different parts of an irgamization. Tlpically, core competencies
reside in a company's people, not in assets on the balance sheet. A
core competence gives a company a potentially valuable competitive
capability and represents a definite competitive asset.

8.10.2 Types of core comPetencies

core competency may come in a variety of ways that may
be developed along the way as the business accumulates experience
ancl as it employs creative, innovative and experienced ernployees
in its fold. It may come in broad aspects widely known to the public
or trnknown to the public at large but very well-known to its target
market. The following are examples of the types of core
competencies:
a) building networks and systems to enable
:iff*H:jn
b) speeding nednext-generation products to market;
c) better after-sale service capability;
d) skills jn manufacturing a high quality produci;
e) iirnovativeness in developing popular product f-eatures;
t) speed/agility in responding to new market trends;
g) system to fill custoruer orders accurately and swiftIy; and
h) technologies to create
;fl:ii:""ii'#1%1il?.:urtipre
8.11 The BGG Matrix
BCG stands for the Boston consulting Group whictr
matrix. BCG matrix falls within the
developed the so-calIed BCG
L62 FUNDAMENTALS OF STRATEGIC MANAGEMENT TASK 1: ENVIRONMENTAL SCANNING 163

purview of internal and micro environment arralysis in the sense unattractive,industry) to bringin cash. Question rnarks
that doing the matrix allows an internal assessment ofthe products unable to obtain a dominant market sllare (and thus
or services offered by the frrm. Knowing and having a BCG matrix become stars) by the time the industry growth rate
for the firm is basic to business managers in particular the inevitably slows become dogs. According to BCG growth
mirketing manager. The BCG matrix gives the members of the share matrix" dogs should be sold of,f or managed
business organization an idea which amongits products or services
carefully for the small amount of cash they can generate.
have a relative advantage or a certain level of competitiveness
vis-a-vis its rival firms. Doing the BCG matrix is quite simple and straightforward
as shown in Figure 64. As shown in Figure 64, a four-quadrant
A BCG matrix is a four-quadrant diagram showing
categorization of products or services handled by the firm. BCG
matrix is a basic tool for knowing which of the products or services
offered by the firm is worth pushing now (or later) and which among
themto spend much of the resources of the firm. The categorization
of products and services wili be of great help in doing the SWOT
analysis and eventually makes strategizing not so diffrcult. An
example of a BCG matrix is that of the Bank of the Philippine pushed hard or set aside for the time being-
Islands as shown in Figure 64.
In developingthe BCG matrix, it is important to do an honest- Stars Question mark
to-goodrress internal analysis before categonzing the products and
seryices then placing them in any of the four quadrants in the Deposi'ts Cash Acceptance Machine
BCG rnatrix. Guided by the track record of the products or services Internet based Services Flxpress Deposit
in terms of sales and contribution to the image ofthe firm, it should Card based Services Express Net \.
be easy to develop the BCG matrix. The matrix classifres the Corporate Finance Services Express phone call center
company's products or seryices into four categories briefly described Mobile Banking
as follows:
a). Question marks. Sometimes called "pro'blem Cash cows Dogs
children" or "wild cats," quesiion marks are new Lending 'Insurance
products with the potential for success, but they.rieed a 1\[ortgage
Leasing
lot of cash f,or development. If such a product is to gain
TYatle anC Cash Management
enough market share to become a market leader and
thus a star, money must be taken frona more mature Investment Banking
products and spent on question marks.
b) Stars. The products/services inthis cabegory are market Figure 64. BCG Matrix of the Bank of the Philippine lslands
leaders typically at'the peak of their prodrrct life cycle. (source: Navanos a Q1AQ)
They are usually capable of generating enough cash to
maintain their high share of the market. When their 8.12 Gompany ComPetitive lndex
market rate slows, stars become cash cows.
c) Cash cows. They include products or services that
typically bring in far more money than is needed to
maintain their market share. In the declining stage of
ttreir life cycle, these products are "milked" for cash thai
will be invested in new question marks.
d) Dogs. This category of products has low market share co4pany competitive index addresses the individual
competitivur"tt of each of the players within the industry. By doing
and does not have the potential (because they are in an
 L64 FUNDAMENTALS OF STRATEGIC MANAGEMENT
TASK 1: ENVIRONIvIENTAL SCANNING 165

the company competitive index, a business concern

is frtted with In co!rumn '3 (compan,y A'rating) examine a parttcular
another business organization offeri"g ri*ii.,
;;;;;;J;;;,". r, compan)/ within the i.ndustry
- for
eranzple; Comparuy A-
Assign a rati.ng ta eaclt factor front 5.0 (outstanding.) to 1.0
I;I -tpoor) based ort Company A's current resitonses to that
der particular factor. Each ratutg is a judgment regardimg how
ytell tltat cornpanJ, is curyent$t dealing with each key success
asawhoreorthe.ouerolff f ,]l;l;Hli.,Hr:,:;:Hl:i;.1,,1.#:'il
the index computatiJrr, factor.
weight is given to each of the common
parameters or criteria. " mtrEf@E[rEEEmELo]
The details ofthe computationar procedure in
arriving atthe
lower portion of
ified by Table Z
the firms under [n column 4 (company A weighted score) multiply the weight
in column 2 for each. factor ti.mes its ratirtg in r:olurnn' 3 to
of comp etitivene s s of the firms ftr'fi
il:i: Jilr1l:"":Ji:-"r:?
This parameter is an excellent tool for developing
obtainthat factor ranging from 5.0 (outstanding) to 1.0 (poor)
brrri.r"r* l"rr"t with 3.C as the auerage,
s-trategy particularly in measuring the results
or outcomes out of In column 5 (contpany B rating) examine a second cotnpanry
the implementation ofeither a corp"orat" o, brriness
level stratery. within the i,ndustry in this case, cL\rnpo,rt'y B. Assign a rating
: Table 7. carcurating company competitive -
to each key su.ccess factor from 5.0 (outstanding) to 1.0 (poor)
tndex
based on company B's current response to each part'cular
Key success factors Weight CompanyA
_ I(SF CompanyA Company B Company B factor.
Rating weighted Rating
score
weighted In column 6 (ccmpany B weighted score) multiply tirc weight
score
in column. 2 for each factor times its rating in column 5 to
obtain that factor's uteighted score for company B.
Finally, add the weigh.ted score for all th.e factors in columns
4 and.6 to determine the total weighted scores for corrypanies A and
B. The total uteighted score in,Cicates how well each corrtpany is
respond.ing to t:urrent and expected key success factors in the
ind.ustry's enuironment- The industry matrix can be expancled to
TDtal 1.00 hrclud,e alt the major competitions within an industry sintply by
crdd,ing two addition,al coiumns for each additidnal competiton
Sr"p, in d,eueloping industry matrix:
Keywords and Phrases to Remernber:
1. In column 7, list q,s ffLa-ny (key success factors) that appear
determine current and. ix
to Emrir.onmentalscanning Internal environnrent
ru"""rr in the ;;;;;;.
"cie.d.
2- In column 2 (weight), assign o, weight to each Macro environment SWOT analYsis
factor from 1.0
t) based on that factor's Societal environrnent BCG matrix
ry's cu,rrent and future Micro environment company competitive index
to L'a regardless of th'*umber
of strategic factors Cbrhpetency Core comPetencY
Distinctive competency External environment