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Strategic capability

Managers often refer to the management of costs as a key strategic capability. So it is. Moreover, understanding the management of cost efficiency as a strategic capability illustrates some of the points made.

Who benefits

Customers can benefit from cost efficiencies in terms of lower prices or more products features the same price. The management of the cost base of an organisation could also be a basis for acheiving competitive advantages. However, for many organisations the management of costs is becomming a threshold stratigic capability for two reasons. read more about cost efficiency here

What does it take

While threshold capabilities are important, they do not of themselves create competetive advantages or the basis of superior performance. These are dependent on an organisation having distinctive or unique capabilities that competitors will find difficult to imitate.

Unique resources

This could be because the organisation has unique resources that critically underpin competitive advantages and that others cannot imitate or obtain – a long-established brand, for example. It is however more likely that an organisation achieves competitives advantages because it has distinctive, or core, competences. read more about unique resources and core competences here

Boards of directors

A common issue increasingly debated is the role of boards of directors and of direktors themselves. Since boards have the ultimate responsibility for the succes or failure of an organisation as well as the benefits received by shareholders or wider stakeholders, they must be conserned with strategy. However, there are two broad choises on how they do this.

Delegate to management

Strategic management can be enturely delegated to management – with the board receiving and approving plans and decisions. Here the stewardship role of the board requires processes that ensure that the purpose of the organisation and its strategies are not captures by management at the expence of other stakeholders. read more about how governing bodies influence strategy here