NĂNG lực CẠNH TRANH – NGHIÊN cứu TÌNH HUỐNG CÔNG TY cổ PHẦN đầu tư và xây DỰNG số 18 (LICOGI 18) e

NĂNG LỰC CẠNH TRANH – NGHIÊN
CỨU TÌNH HUỐNG CÔNG TY CỔ
PHẦN ĐẦU TƯ VÀ XÂY DỰNG SỐ 18
(LICOGI 18)
THESIS

COMPETITIVE CAPPABILITIES
- CASE STUDY OF CONSTRUTION AND
INVESTMENT JOINT STOCK
COMPANY NO.18 (LICOGI 18)

( Au g u s t ) 2 0 1 4


ACKNOWLEDGEMENT
The thesis “Competitive Capabilities - Case Study of Constructon and
Investment Joint Stock Company No.18 (LICOGI 18) ” is my own research. The
data and the thesis result is of my own work with collecting, using learned
knowledge and exchanging ideas with my instructor to finish.

ii


TABLE OF CONTENTS

ACKNOWEDGEMENT………………………………………………………….ii
LIST OF FIGURES ……………………………………………………..…..……iii
LIST OF TABLES ……………………………………………………………….iv
LIST OF CHARTS ………………………………………………………………v
INTRODUCTION ………………………………………………………………...1
CHAPTER 1: THEORICAL BASIC OF FIRM COMPETITIVE

CAPABILITIES ……………………………………………………………..7
1.1.
The concepts of competition, competitive capabilities and
advantages..................................................................................................7
1.1.1.

Competition.................................................................................................7

1.1.2.

Competitiveness..........................................................................................7

1.1.3.

Competitive Advantage...............................................................................8

1.2.

The importance of quanlity in creating competitive capabilities and
advantage...................................................................................................9

1.3.

How to identify the components of sustainable competitive advantage

................................................................................................................................... 9
1.3.1.

Resources...................................................................................................11

1.3.2.

Capabilities................................................................................................13

1.3.3.

Core competencies.....................................................................................14

1.3.4.

Superior competencies...............................................................................14

1.3.5.

Sustainable Competitive Advantage..........................................................15

1.4.

Functional domains - the keys to sustainable competitive advantages
...................................................................................................................19

1.4.1.

Operation production.................................................................................19

1.4.2.

Marketing..................................................................................................20

1.4.3.

Materials management...............................................................................23

1.4.4.

Research and Development (R&D)...........................................................23

1.4.5.

Finance......................................................................................................24

1.4.6.

Human resources.......................................................................................25
iii


1.4.7

Customer relations, customer services.......................................................26

1.4.8.

Branding and corporate culture..................................................................28

1.4.8.1. Branding....................................................................................................28
1.4.8.2. Corporate cultural development.................................................................28
1.5.

International experiences in enhancing competitive capabilities and

advantages................................................................................................29

Summary of chapter 1
34
CHAPTER 2: THE CURRENT SITUATION OF COMPETITIVE
CAPABILITIES AT CONSTRUCTION AND INVESTMENT JOINT STOCK
COMPANY NO.18 (LICOGI 18)….. 35
2.1.
About Construction and Investment Joint Stock Company No.18......35
2.1.1.

History and Development..........................................................................35

2.1.2.

Organizational structure and Business activities........................................36

2.1.2.1. Organizational structure.............................................................................36
2.1.2.2. Business activities......................................................................................38
2.1.3.

Business results in the period of 2011-2013..............................................38

2.2.

The current situation of competitive capabilities at Construction and
Investment Joint Stock Company No.18................................................41

2.2.1.

The awareness of the Company’s leaders about competitive capacity and
the importance of competitive capacity.....................................................41

2.2.2.

Competitive situation of LICOGI 18.........................................................44

2.2.2.1. Impact of external factors on competitive capacity:..................................44
2.2.2.2. Functional areas - Bases for competitive capacity creation of LICOGI 18 JSC CO.,
...................................................................................................................47
2.3.

Identification of the competitive advantages of LICOGI 18 through
comparisons with competitors in the same industry.............................75

2.3.1.

Market share..............................................................................................75

2.3.2.

Synthesis of competitiveness assessment...................................................77

2.4.

Some drawbacks and causes...................................................................78

Summary of chapter 2

80

iv


CHAPTER 3: THE SOLUTIONS TO ENHANCE COMPETITIVE
EFFICIENCIES OF CONSTRUCTION AND INVESTMENT JOINT STOCK
COMPANY NO.18 (LICOGI 18)
81
3.1.
Development orientation of LICOGI 18 Joint Stock Company to
2015, vision to 2020..................................................................................81
3.1.1.

Gerneral orientations.................................................................................81

3.1.2.

Specific objectives.....................................................................................82

3.2.

Some solutions to enhance competitive capabilities of the company.........83

3.2.1.

Increase charter capital, balance capital structure and optimally use capital
efficiency...................................................................................................83

3.2.2.

Continue investment activities, equip the most advanced equipment........85

3.2.3.

Apply advanced management methods in construction to reduce product price...87

3.2.4.

Improve administrative capacity................................................................91

3.2.5.

Provide trainings, foster and develop human resources.............................93

3.2.6.

Complete and develop LICOGI 18’s brand and culture.............................94

Summary of Chapter 3 ...………………………………………………….. 95
CONCLUSIONS…………………………………………………………… 96

REFERENCES
APPENDICES

v


LIST OF ACRONYMS

LICOGI 18

VINACONEX 1
PHUC HUNG

: Construction and Investment Joint Stock Company No.18
: Construction Joint-Stock Company No.1
: PhucHung Holdings Construction joint stock company

/CONSTREXIM
PHUC HUNG
SONG DA 12

: Song Da No.12 joint stock company

vi


LIST OF FIGURES
Figure 1.1. How to identify sustainable competitive advantage............................10
Figure 1.2. Origin of sustainable competitive advantage.......................................11
Figure 1.3. The curve of long-term unit cost.........................................................19
Figure 1.4. Experience curve.................................................................................20
Figure 1.5. The relationship between the average cost per unit of product and the
percent of customers leave..................................................................22
Figure 1.6. Human resources management content...............................................25
Figure 2.1. Chart of organizational managemeny of LICOGI 18..........................37
Figure 2.2. The Process of economic and technical management of LICOGI 18. .48
Figure 2.3.

Summary and comparison of assets and capital structure, 2012 - 2013....65

vii


LIST OF TABLE
Table 1.1.

Tangible resources...............................................................................12

Table 1.2.

Intangible resources.............................................................................13

Table 1.3.

Standards to define sustainable competitive advantages.....................16

Table 1.4.

The outcome of integration of sustainable standards...........................18

Table 1.5.

Corporate cultural structure.................................................................29

Table 2.1.

Consolidated Business Results 2011-2013..........................................38

Table 2.2.

Business results of the parent company 2011-2013.............................39

Table 2.3.

The detailed cost analysis of products sold in 2012, 2013...................56

Table 2.4.

Summary of competing tool comparison among companies...............61

Table 2.5.

Indicators of assets – capital sources of the Parent company in 2011-2013
............................................................................................................65

Table 2.6.

Revenue, Price, Net profit in 2012, 2013............................................67

Table 2.7.

Summary table of labor structure........................................................70

Table 2.8.

Financial indicators against competitors.............................................75

Table 2.9.

Value of business operation and market share of construction field in

2011, 2012, and 2013..........................................................................76

Table 2.10. Evaluation of competitive capacity among companies........................77
Table 3.1.

Of plan of investment and purchasing facilities for civil works..........86

viii


LIST OF CHART
Chart 2.1.

Total assets of the parent Company 2011-2013...................................40

Chart 2.2.

Consolidated revenue and revenue of the parent Company 2011-2013
............................................................................................................40

Chart 2.3.

Consolidated profit and profit of the parent Company 2011-2013......41

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INTRODUCTION
1. Rationale
Although the world economy has fallen into crisis in the past few years and

Vietnam is no exception, Vietnam is still a country with impressive economic growth,
accompanied with increasingly rapid urbanization speed. As forecasted by Vietnam’s
Ministry of Construction, the housing market demand in the period of 2015-2020 is newly
construction of 425 million square meters of floor area, with about 3 million newly built
apartments/ houses; and investment in construction of 12.5 million square meters of social
housing in urban areas. The annual growth of the construction industry is 8%-9%,
illustrating that the demand of the construction market in Vietnam is still very huge.
The construction industry is indispensable to the socio-economic
development of every country. In Vietnam, it is significantly important because of
the country’s ongoing industrialization and modernization. Therefore, the
development of construction enterprises in order to meet the industrialization and
modernization is an urgent task.
LICOGI 18 Joint Stock Company (JSC.) is a privatized state enterprise. By
promoting its advantages and achievements gained during 50 years of growth and
development, and quickly adapting to the mechanisms, the Company has gradually
established and improved its competitiveness in the marketplace. As the
competition in the construction industry these days is increasingly fiercer, LICOGI
18 JSC. is likely to encounter a large number of strong competitors, and what it has
achieved is always threatened in the future, hence enhancing the Company’s
competitiveness is a must.
For the ability to preserve and promote the achieved successes, it is essential
for LICOGI 18 JSC. to take measures to retain and increase its market shares and
dominate the market. Proceeded from the reality and the competition status of
LICOGI 18 JSC., the thesis named “Competitive Capabilities - Case Study of
Constructon and Investment Joint Stock Company No.18 (LICOGI 18)" is
selected by the author as one of measures for the goals above.
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2. Aims and objectives

Based on basic theories on competition, combined with practical researches,
analysis and assessment of the current status and competitive trends of LICOGI 18
JSC., this thesis proposes a number of measures for the Company to enhance its
competitiveness in the construction sector.
3. Objects and scope of research
Due to the diversity and complexity of the subject, the focus of this thesis is
studying the competition theory, analyzing issues related to the competitiveness of
LICOGI 18 JSC. in the construction marketplace, and at the same time introducing
major, strategic and targeted solutions for enhancement of the Company’s
competitiveness in the construction sector.
4. Methodology
Selecting research methodologies
In order to work on the thesis and answer all the research questions, first of
all, the author chose the qualitative method to analyze the secondary data. This way,
based on previous researches and documentation of relating issues, the author
gathered information for study on theories and judgments on issues related to
research questions such as competition, competitiveness, sustainable competitive
advantages, etc. and construction businesses. Specifically, the author did a search
for and study on documents, regulations, reports, textbooks, reference materials and
journals for theories on enhancement of competitiveness, techniques for analysis of
competitiveness, and competitors of LICOGI 18 JSC., etc., then proposing more
suitable measures for the Company.
The survey research was carried out with the quantitative method from the
primary data source, which is done through interviews and questionnaires, with
participation of 21 leaders and management staff of LICOGI 18 JSC., including
Chairman, members of the board, head of management board, board of directors,
heads of departments and 8 directors of its subsidiaries, investors of some
construction works, leaders of several construction companies, LICOGI

2

Corporation and leaders, some experts of the Department of Enterprise Management
under MOC.
The research process consists of the following steps: Determining research
objectives, developing research model, selecting scale, designing questionnaire,
conducting survey, collecting and processing data, analyzing and conclusion.
Research Process
Research objectives

Research model

Designing questionaire

Conducting survey

Collecting and
processing data

Analyzing and
conclusion

The detailed questionnaire is prepared with the aim of collecting information
related to the research.
With the intention of understanding the knowledge of LICOGI 18’s leaders
about competitiveness, the importance of competitiveness and comparison of
competitors, two separate questionnaires were designed.
The questionnaire content basically consists of two parts as follows:

3

General information:
This part is to ask for relevant basic information of the surveyees such as
gender, age, qualifications, seniority, position, in which nominal scale, ratio scale
and ordinal scape are applied.
Research content:
For the questionnaire related to the knowledge of LICOGI 18’s leaders: Are
they aware of competitiveness, core competency, superior competency, competitive
advantage,

sustainable

competitive

advantage,

and

the

importance

of

competitiveness and that of sustainable competitive advantage? To what extent?
And how do they apply this knowledge into their real work?
In order to assess the perception of the respondents, in this case the
understanding of competitiveness, two types of questions are selected for the
questionnaire. The first one is open questions, i.e the respondents can answer on

their own. The second one is closed questions, i.e. multiple choices on levels of
understanding such as don’t know, know a little, know, know well, know very well
are available for the respondents to choose.
For the questionnaire relating to the survey, closed questions are prepared to
collect data from construction businesses on scale, human resources, finance,
machinery, brand, corporate culture, business production outcomes and so on.
(For details of questionnaires, see the Appendix)
Data collection and result analysis method
In order to do the survey, the author first made attempts to build friendly
relationships with respondents to gain their trust and assure of use of their
information only for research, not for any other purposes.
In terms of the secondary data source, a search for materials such as books,
newspapers, professional journals was conducted on websites, reports and
regulations before classified. Then, relating must-read issues were identified.
During the process of studying materials, all significant and essential data was
marked and sumed up for the future lookup and reference. Some data was quoted

4


directly in the paper, while the rest was generalized or rephrased to help the author
express his personal opinions and assessments. In terms of collection of the
company information through secondary data sources, as the author himself used to
work at the company, most of the information can be accessed. By studing materials
and documents, combined with observations, the author managed to integrate
essential information as well as judgements and comments in his research.
The analysis of results was conducted with methods of statistics, comparison,
analysis and collection of real data.
Research process
After the detailed research proposal was approved, the author collected

data and materials for literature review, which was carried out within 4 weeks.
Observations and studies on the company were conducted and accumulated
during the author’s working time in the company and the Ministry of
Construction. Following study on materials, the writing process and survey was
started through interviews and questionaires. Then, the results, after obtained,
were summarized and analyzed in two weeks’ time. During writing up the thesis,
the author kept in close touch with his supervisor for timely advice and
comments. The thesis was completed after 3 months from starting.
The validity and reliability of data
This research is developed based on the secure validity and reliability of
information and data with evidences as follows:
First, the research model was analyzed on the basis of theories which have
alreadey been proven in reality and recognized in previous studies.
Second, the research methodology was developed in accordance with the
research questions and the author’s research purpose, particularly selection of
questionnaire of multiple choices.
The content of the questionnaires was based on previous studies, comments
of professionals and the supervisor, as well as of a small group of sample
respondents, so that the questions would be adjusted and modified to be more
suitable to the research purposes.

5


Besides, the result analysis contributed to improved validity of the findings;
therefore, all replies from respondents were retained, respected and analyzed
objectively.
In short, the results of this research are of objectivity and high reliability. The
research results will be analyzed in details in Chapter 2.
5. Structure of the thesis

In addition to the introduction, conclusion, list of tables, references and
appendices, this thesis consits of 3 chapters, including:
Chapter 1: Theorical Basic of firm competitive cappabilities
Chapter 2: The current situation of competitive capabilities at Construction
and Investment Joint Stock Company No.18 (LICOGI 18)
Chapter 3: The solution to enhance competitive capabilities efficiencies of
Construction and Investment Joint Stock Company No.18 (LICOGI 18)

6


CHAPTER 1
THEORICAL BASIC OF FIRM COMPETITIVE
CAPABILITIES
1.1. The concepts of competition, competitive capabilities and advantages
1.1.1. Competition
In the business world, competitors do not compete face to face as in military,
but in a sectoral environment towards a target market segment and efforts to attract
customers.Through purchasing, customers will decide who is the “winner” or
“loser”. The competition results are demonstrated by the achievement of each
competitor in the market, which must be recognized by customers. In the
consumers’ eyes, the "winner" seemingly stands out with important features
satisfying their needs.1
Competition, in the enterprise level, is fighting for or grabbing from
opponents customers, market share and business resources. However, the nature of
competition today is not destroying opponents; it is the businesses themselves
which must create and provide customers with new or higher value added than their
competitors, so that customers would choose them instead of their opponents. 2
1.1.2. Competitiveness
During the research on competition, people introduced the concept of

competitiveness, which was considered at different levels such as national
competitiveness, business competitiveness, and competitiveness of products and
services...
The competitiveness of an enterprise is revealed through its competency and
advantages in satisfying as much as possible the customers’ demands, compared to
its opponents, for increasingly higher profits. That said the competitiveness of an
enterprise must first be derived from its competencies. These are the inner elements
of every business, taking account of criteria on technology, finance, human
1
2

Source: Strategic Management - Statistical Publishing House, 2007
Source: Michael Porter, 1998

7


resources, corporate organization, etc. not only separately, but in assessments and
comparison with competitors in the same field and the same market. It would be
pointless if the inner strengths and weaknesses of an enterprise are evaluated
without respective comparison with its competitors. Based on those comparisons,
enterprises have to create and obtain their own competitive advantages in order to
develop their competitiveness. This helps enterprises not only better satisfy the
demands of their target customers, but attract competitors’s customers as well.
In fact, there is no business with sufficient ability to fully satisfy all
customers’ requirements. Often, an enterprise is good at one aspect and limited in
another. Importantly, they have to be aware of this, and make attempts to improve
their strengths to best satisfy the demands of customers. The inner strengths and
weaknesses of a business are revealed mainly through its main activities such as
marketing, finance, production, human resources, technology, management,

information systems...
Therefore, it is obvious that the concept of competitiveness is a dynamic one,
which is constituted by various factors and is subject to the impact of both micro
and macro environment. A product can be considered competitive this year, but no
longer in the next year or the year after next if it is unable to maintain its
advantages.
1.1.3. Competitive Advantage
Competitive advantages, in the broad sense, are those enabling an enterprise
to be superior to its rivals. Competitive advantage brings enterprises the ability to
retain its success in the long term.3
Competitive advantage is the value provided for customers by enterprises,
which exceeds the cost to create it. This is the value for which customers are willing
to pay and what preventing requests for lower prices, compared to that of
competitors, for equivalent benefits or provision of unique benefits rather than a
higher arisen price.4
When a business gains competitive advantages, it will have things which its
3
4

Source: Strategic Management – Statistical Publishing House, 2007
Source: Michael Porter, 1998, page 3

8


competitors do not own, i.e. the business will perform better than its opponents, or
be able to do things that the others can not. Competitive advantage is needed for the
success and long-term survival of a business. That is why many businesses effort to
develop their own competitive advantages; however, this is easily eroded by
imitation of competitors.

1.2. The importance of quanlity in creating competitive capabilities and
advantage
In the trend of integration and development, every business has their own way to
survive and grow. The activities needed to affirm the ultimate goals are establishing
strategies and maintaining competitive advantage as basis for strategic planning. An
overall suitable strategy will help businesses maximize their strengths and protect
themselves against adverse impacts of the five market forces, namely Supplier power,
Threats of substitutes; Entry barriers; Buyer power and Level of competition.
While the first thing determining the profitability of a business is the
attractiveness of the sector in which it is operating, the second one is its position in
that sector. Even though a business operates in a sector of profitability below
average, it is likely to generate very high profits if it reaches a competitive position.
Each company determines their own position in their sectors by introducing
their own available advantages. Michael Porter believed that the advantages of any
business always lie in one of the two aspects: cost advantage and product
differentiation. By applying these advantages, the company will create a
competitive advantage through the pursuit of three generic strategies: lower cost,
product differentiation and focus.
Competitive advantage help many businesses achieve the "market power" to
succeed in business and in competition.
The important thing for competitive advantage to be developed and maintained
sustainably is to understand well the nature and origin of competitive advantage.
1.3. How to identify the components of sustainable competitive advantage
The most important thing for any businesses, according to M.Porte, is
building a sustainable competitive advantage, which means the businesses must
continually provide the market with a special value that no rivals can offer.
To determine a sustainable competitive advantage, it is necessary to make a
9

look to resources. It is a fortune that a business is rich in resources. However, if they
are not deployed, they remain resources, otherwise they will become capacity. In the
market mechanism and integration tendency, a business wishing success in
development has to seek out and promote their key capabilities, which are called
core competencies. However, core competencies are good but not sufficient, as the
competitors can have the same advantage. We have to determine what is truly
superior competency to get sufficiently large (safe) distance so that competitors can
not or take very long time to catch up us. From scientific analyses, the sustainable
competitive advantage of a business can be identified.
Figure 1.1. How to identify sustainable competitive advantage
Sustainable
SustainableCompetitive
Competitive
Advantage
Advantagehelps
helpsorganizations
organizations
totogain
revenues
above
gain revenues aboveaverage
average
Short term
Superior
Superiorcompetencies
competencies
The
Thesources
sourcesofofcompetitive
competitive

advantage
advantage

Core
Corecompetencies
competencies

Long term
- Precious
- Rare
- Difficult to imitate
-Sufficiently
large
distance
- Coinciding with the
success factors

Ability
Ability
Deployed
Deployedresources
resources

Resources
Resources
Tangible
Tangible
Intangible
Intangible

Source: Dr.Dang Ngoc Su - MBA program materials
A core competence (which makes differences) is the unique strength enabling
10


a company to achieve superiority in efficiency, quality, innovation and customer
responsiveness, thereby creating superior value and gaining competitive advantage.
A company with core competencies will be able to differentiate its products or
retain lower costs than its rivals. Thanks to that, the company has created more
value than its competitors and will achieve rates of return above average.
Figure 1.2. Origin of sustainable competitive advantage
Resources

Special
ability

Superiority
Effectiveness
Quality
Innovation
Customer
responsiveness

Difference
Creating
the
superior
value

Higher

profit

Low price

Competencies

Source: Charle W.L.Hiclk; Gareth Rjones (1998)”An Integrated Approach”
Strategic Management, Houghton MifflinCo.
1.3.1. Resources
The core competencies (which make differences) of an organization are
generated from the two sources: the resources and their potential.
The resources, in the broad sense, include a series of components of the
organization such as techniques, materials, human resources, and financing, and can
be divided into two categories: tangible and intangible resources. Tangible resources
are visiable and quantifiable, including financial resources, organization, physical
conditions and technologies.

Table 1.1. Tangible resources
11


Resources

Content
- Knowledge

Human resources

Financial resources
Organizational resources

Material resources

Technical resources

- Trust
- Management capabilities
- Organization habit
- Ability to borrow
- Ability to self-fund
- Formal reporting relationship structure,
planning system, official joint control
- The complexity and distribution

of

machineries, equipment and factories
- Access to raw materials
- Technical reserves such

as

copyright,

trademarks, patents, trade secrets

Source: Strategic Management – Statistical Publishing House, 2007
Intangible resources include innovation and reputation. In the development of
core competencies, intangible resources are more useful and outstanding, compared
to tangible resources.

In the global economy, "success" of a company depends more on its wisdom
and systematic resources than its properties. Furthermore, the ability to manage
human intellect and transform it into products/services successfully is rapidly
becoming the basic operation skills of the times. Many evidences show that the
proportion of intangible resources tends to rise very fast and dominates tangible
sources. As intangible resources are difficult for competitors to notice, learn about,
acquisite, imitate or replace, businesses prefer them as basis for capabilities and
core competencies over tangible resources.
Resources themselves can not create competitive advantage for companies.
To generate different capabilities, resources must be unique and worthwhile. A

12


unique resource is that can not owned by any other company, while a valuable one
is that, in some ways, helps to create a strong demand for the company's products.

Table 1.2. Intangible resources
Resources

Content
- Ideas

Patents

- Scientific ability
- Innovation
- Reputation with customers
- Brand
- The perception of durability, quality and

Brand name

reliability of products
- Reputation with suppliers in terms of
effectiveness,

efficiency,

support,

interaction and mutually beneficial
relationship
Source: Strategic Management – Statistical Publishing House, 2007
1.3.2. Capabilities
Considered as the origin of abilities, intangible and tangible resources are
basic things resulting in the development of competitive advantage. Potential
capability is the ability of a company to deploy purposely integrated resources in
order to achieve a desired goal. As a re-organized close link, capabilities are
generated over time through the interactions between tangible and intangible
resources. These skills focus on the daily routines of the organization, that is, how to
make decisions and manage internal processes to achieve the organization’s goals.
More generally, the potential capabilities of a company are the products of
organizational structures and control systems. They define how and where decisions
are made in the organization, reward behavior, values and cultural norms of the
company. As essential for competitive advantage, the capabilities commonly rely on
the development, transmission, and exchange of information and knowledge through

13

human resources.
The business leaders in the global environment have increasingly supported
the point of view that knowledge in human resources is the most significant factor
among a company’s capabilities and can be the root of all competitive advantages.
Companies also have to be able to use the knowledge they have and make it spread
to all of their activities. The distinction between resources and potential capabilities
is mainly to understand what generates the capacity to make difference. A company
may possess unique and worthwhile resources, but without potential capabilities to
use these resources efficiently, that company is still unable to create and maintain
the ability to make differences.
1.3.3. Core competencies
Core competencies are the resources and capabilities of a company which are
used as sources of competitive advantage. They bring a company the competitiveness
and its own qualities. Core competencies are developed over time through organized
learning and accumulation of how to exploit various resources and capabilities. As a
practical capability, core competencies are "luxuries of a company," what the
company performs better than its competitors and hence increases value of goods and
services in a long time.
Not all of the resources and capabilities of a company are strategic assets.
Strategic assets must be competitive and potentially used as a source of competitive
advantage; they may even include the resources and capabilities that are
disadvantageous strategically as they lie in the limitations of the company in
comparison with competitors. Therefore, some resources and capabilities may not
be developed into a core competency.
1.3.4. Superior competencies
A superior competency is a special strength that enables a company to
achieve a superior ability in quality, innovation and customer responsiveness,
thereby creating outstanding values and maintaining competitive advantage. A
company with special abilities can offer different products or lower costs than its

14


competitors. Consequently, it creates more values than its competitors and gains
possible profits above average.
Superior competencies include short-term and long-term ones. Short-term
superior competencies are the resources and abilities of a company to create its
short-term competitive advantage, for example financial, material, technical
resources, management ability and innovation ability. These capabilities are easily
imitated or caught up by competitors, and the company will lose its sustainable
competitive advantage.
Long-term superior competencies are the resources and capabilities of a
company which are generated during a process of learning, supplementing and
accumulating. These capabilities are difficult for competitors to imitate or take long
time to catch up. They include human resources, reputation with customers, brand,
and company culture...
Long-term superior competencies ensure the standards of preciousness,
rarity, difficulty in imitation, sufficiently large distance and coincidence with
success factors.
1.3.5. Sustainable Competitive Advantage
The sustainable competitive advantage of businesses has four features:
Firstly, it can help businesses create value, reduce costs and enhance business
performance.
Secondly, it is unique and combined with resources in a unique way.
Thirdly, it is endogenous; its production is the result of interactions between the
units and individuals within the organization, through the coordination and organization
of technical resources of the business, creating basic capability of the business.
Fourthly, the competitive advantage of a business is formed during the process
of learning and accumulation of that business; therefore, it can not be purchased in

the market and difficult to be imitated by others.
From the short-term perspective, the competitive advantage of enterprises is
low cost, good product features, and good after-sales services. But from the long-

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term perspective, creativity is much more important than the existing advantages, as
no advantage can be lasting forever and they can be diminished due to changes in
techniques, market, and the imitation of competitors. The competitive advantage of
businesses is a competitive strength associated with the organization, which must be
constantly nurtured and developed by enterprises to retain their long-term
competitive advantage in the changeable market.
Standards of sustainable competitive advantages
The core competencies need to ensure the four standards of sustainable
competitive advantages: Preciousness, rarity, difficulty in imitation, sufficiently
large distance, and coincidence with the success factors.
Table 1.3. Standards to define sustainable competitive advantages
Standards
Preciousness
Rarity

Content
- Helping companies to defuse threats and exploit
opportunities
- Not owned by many opponents
- In terms of history: the culture and brand is
worthwhile and unique
- Cause and effect are not clear: the causes and the

Difficulty in imitation

function of a capacity are not clear
- The social complexity: international relations,
credibility, and friendship among administrators,
staff, suppliers and customers
- Surpassing the competition in many aspects; it

Sufficiently large distance

takes time and efforts for opponents to shorten the

Coincidence with success

distance.
- No equivalent strategy

factors

Source: Strategic Management – Statistical Publishing House, 2007
Preciousness
The capability enables companies to explore opportunities and reduce threats
from the external environment. By effectively deploying the opportunities,
companies can create values for customers. Sometimes, the capabilities of
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