Evaluate whether Prahalad and Hamel's concept of Core Competencies and Porter's Five Forces model are likely to be effective frameworks for ADP's future business strategies. Refer to Appendix 2 in your answer.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. Knowledge: Core competence: The main strengths or strategic advantages of a business.
2. Knowledge: Core competencies are the collective knowledge and technical abilities that allow a business to be competitive in the marketplace.
3. Knowledge: Porter's five forces analysis is a framework that attempts to analyse the level of competition within an industry when planning strategic developments.
4. Knowledge: Porter's five forces analysis includes: buyer power, supplier power, threat of substitutes, ease of entry and competitive rivalry.
5. Application: Development of points made in Appendix 2.
6. Application: ADP: Maker of very reliable electric motors which are used in own appliances and by other manufacturers; 'mini-battery' technology has been patented.
7. Application: Rivals seem to having problems developing low water/energy use washing machines. However, barriers to entry might be lower in this washing machine product segment.
8. Application: ADP has experience of operating multi-nationally and selling in many markets.
9. Application: Appendix 2 suggests that there is less competitive rivalry in the Option B strategy and that this is ADPs unique core competency.
10. Analysis: Patents make it difficult for rivals to copy mini-battery technology therefore provides ADP a distinctive core competency and increases competitiveness in the market.
11. Analysis: Understanding core competencies will enable ADP to focus on strategies that ADP will have a competitive advantage in and therefore are likely to be more successful.
12. Analysis: BUT are these sufficient to allow the proposed product development? Do these competencies offer sufficient benefit to customers of the proposed products? Scope for discussion based on weaknesses in core areas e.g. lack of mobile phone experience and ADP tends to operate in lower prices segments of markets.
13. Analysis: By using Porter ADP can assess the threat of substitutes etc. to decide whether Option A or B is better. This will reduce the risk of entering the wrong market.
14. Evaluation: Drawbacks to both models: e.g. Porter – really used for whole industry analysis rather than specific market segments; Core competence – not always easy to identify a core competence and it can change with time – and if for example certain people leave an organisation.
15. Evaluation: Other strategic analysis tools and frameworks for future business strategies e.g. PESTLE and SWOT.
16. Evaluation: Supplier power might be a real problem with both projects BUT ADP might be able to develop its own washing machine pump therefore the model is useful in guiding ADP's decision making.
17. Evaluation: Option B as an example of a future strategy demonstrates a more distinctive/unique core competence as ADP's competitors have less advanced batteries therefore the model is useful in guiding ADP to most appropriate strategy.