Toyota is able to produce high-quality, well-designed cars at a lower delivered cost than any other firm in the world. This is an example of a(n):
A) core competency. B) external opportunity. C) initial strength. D) benefit advertising
The correct answer and explanation is:
The correct answer is A) core competency.
A core competency refers to a unique strength or capability that a company possesses, which allows it to deliver products or services more efficiently, effectively, and competitively than its rivals. In the case of Toyota, its ability to produce high-quality, well-designed cars at a lower delivered cost than any other firm demonstrates its core competency in manufacturing and operational efficiency. This competency is a result of Toyota’s strong focus on continuous improvement (kaizen), lean manufacturing practices, and effective supply chain management.
The term “core competency” was popularized by management scholars Prahalad and Hamel, who defined it as a deep proficiency that allows a company to deliver unique value to its customers. For Toyota, the key factors driving this competency include its world-renowned production system, its emphasis on quality control, and its ability to scale production effectively while keeping costs low. Toyota’s core competency also allows it to maintain a competitive advantage in the global automotive market.
The other options are less relevant to Toyota’s situation:
- B) External opportunity refers to a factor outside the company, such as changes in market conditions or consumer preferences, which might provide new prospects for growth but does not reflect Toyota’s internal capabilities.
- C) Initial strength is not the best description here, as it suggests a temporary advantage rather than a long-term, sustainable competency.
- D) Benefit advertising refers to a marketing strategy where the company promotes the benefits or advantages of its product or service. While Toyota may advertise its strengths, the ability to produce quality cars at a lower cost is more accurately a core competency.
Therefore, Toyota’s ability to create high-quality cars at a lower cost is an example of a core competency, allowing the company to consistently outperform competitors in the automotive industry.