SUMMER 1998

Dynamics of Core Competencies in Leading Multinational Companies

or production process internationally and combine various inputs to meet a specific customer’s needs. Citicorp has a reliable process competence in providing multiple financial services through

its own global network to its 100 million customers worldwide. It aims to provide its customers “any banking service, anywhere, anytime, in any currency in any way they choose” without losing

transactions and without bureaucratic delay. It is able to provide these cross-border transactions efficiently because of over 100 years of foreign exchange experience. Its presence in some

countries with few banking restrictions gives the firm operational flexibility. Citicorp also has a reputation with customers for executing cross-border transactions. Citicorp has been ranked the

world leader in foreign exchange trading sixteen years in a row by Euromoney. Citicorp’s organizational structure assigns customers a single contact person to enhance the customer confidence

in these cross-border transactions. Competitors do not have such a reputation and may have different organizational structures. They also cannot offer such reliable services because they have

a more limited network of own affiliates abroad and have to rely on correspondent banks, creating seams between organizations and increasing costs in the process. An example of this reliable

process capability is reflected in Citicorp’s “Globe Deposit Account” that is targeted to ethnic market retail customers in many countries. Potential account holders are offered a choice of 15

currencies in which to hold their deposit, which is held by Citicorp in Singapore, where there are few banking restrictions. Citicorp allows depositors the option to change the currency of their

deposit every week and in increments of $1,000 of their total deposit. Further, in order to improve communication, each depositor is assigned a relationship manager who may also be from the

same ethnic community. Customers obtain the potential benefits of being able to choose their currency exposure and take advantage of relative shifts in currencies. Close External Relationships

A close relationship with suppliers, regulators, professional organizations, distributors, and customers yields several benefits. The firm and partner can identify opportunities for mutual benefit

(such as joint cost reduction by removing purchasing and sales functions or off-peak scheduling). Suppliers can suggest ideas for new product development or execute rapid design changes

needed in parts. Professional organizations can provide superior talent. Regulators can facilitate and hasten product or manufacturing quality approvals. Distributors can provide market access

and customer information. Customers can suggest new competencies that the firm should develop. Inductotherm is the global market leader for induction furnaces that use electric current to

create a magnetic field which, in turn, creates an electric current to heat and melt a target metal. Henry Rowan, its CEO and founder, noted that he constitutes the bulk of the R&D effort within

the firm. In addition, the firm relies on close, open relationships with vendors for R&D by welcoming

CALIFORNIA MANAGEMENT REVIEW

VOL 40, NO. 4

SUMMER 1998