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Understanding Distinctive Competence - Assignment Example

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The author of this assignment "Understanding Distinctive Competence" casts light on the concept of competence. It is stated that core competence is the foundation that gives a particular company the competitive edge against rival companies within the industry.  …
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Understanding Distinctive Competence
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Strategic Management Question 1 a.1.) Core competence is the foundation that gives a particular company the competitive edge against rival companies within the industry. This paves the way for the entity to pioneer or build up a better array of innovative services and products for end users. While core products are developed through the introduction of core competencies, it must be understood that the product which are brought about by having a consortium of core competencies are not directly purchased by the end consumer; but ate mainly utilized by companies to build a larger number of products for the end user (QuickMBA, 2010: 1-5). Per se, core competencies form a groundwork that taps into other possible market opportunities in order to open new business ventures. This is done by properly merging sets of dissimilar core competencies that appropriately matches viable market opportunities, which answers current trends and demands. The combination and coordination of various technologies and production proficiency are the pillars of core competencies (QuickMBA, 2010: 1-5) A core competence must have the following three (3) qualities: 1) must be able to provide access to a wide variety of markets; 2) must provide vital benefits to end products; and 3) must be difficult to imitate by other companies who are in the same line of business. Hence, core competence does not rely on the financial ability of the company or firm to hire and pay brilliant engineers and skilled workers for a particular technology or business venture. Neither should it be expensive. Core competence in its most basic sense is the efficient synchronization between all groups or units involved in the launching of a project; meaning from the conceptual design board up to the marketing and distribution of the actual product to the consumers. Relatively, the effective development of a company’s core competence entails a correct combination of managerial decisions, actions and implementation. And while the development of a successful end product is the common goal of managers, it is likewise very essential that the company’s assets in terms of retaining skilled employees and keeping its finances on the level are not compromised in the process. A simple example of this is a paper company that produces and manufactures handmade paper. The core competence of this particular entity is that it produces handmade paper from raw materials and is crafted by hands, not machine. This is the distinctive brand or mark of the said company, which elevates it from the other paper manufacturers in the industry (Ward, n.d.: 1). The company in this case benefits consumers in the sense that the handmade paper can be produced at a lower price, thus has a lower retail value in comparison to special papers that are manufactured by machines. In addition to this, handmade paper is not easy for competitors to imitate since production is easily controlled; and the company has access to raw materials that are difficult to find commercially. And just like any other commercial paper – can be used for end products that are paper-based (examples: stationeries, books, notebooks, pad papers); and is likewise available in most bookstores and paper retailers. a.2.) On the other hand, distinctive competence is the unique quality or inherent characteristics of a certain company that set it above or apart from all the rest within a given sector of industry. This is mainly the reason why various companies across different industries have their own set of loyal customers, which in business terms mean – market share. Distinctive competence is created by a number of factors like provision of quality service; customer satisfaction; low cost or the unique special design of a certain product (Houston, 2000: 1). Having these qualities lead to having a “cutting edge” against rival companies or competitors because a particular corporation is not merely viewed as just at par with the rest but as the best among the rest; especially if it can maintain the unique quality or asset is has been known for many times over despite occasional odds. Adaptability or flexibility is the key to having distinctive competence because a firm must learn to evolve and absorb new trends. And since the market is very volatile in the requirement for supply and demand, a company whose name is known must be able to uphold its distinguishing quality and can still continuously answer to the call of current times (Houston, 2000: 1). An example of distinctive competence is a courier company, who like any fast-forward entity can deliver packages and mails to many countries around the globe; but can deliver its goods at a lower price without compromising its ability to deliver on time and with courteous accommodating staff who deal personally with clients. Question 1 b) Sustainable competitive advantage is viewed as a triangular connection between three main components of a business. These are: 1) the company; 2) the company’s customers; and 3) the company’s competitors. Aside from this, it must be able to run its operations at a lesser cost as compared to competitors, thereby giving the company a chance to earn bigger margin of profits (Nobilis, 2008: 1-4). Commercial success in reality depends on a number of economical factors like supply and demand; good service; good products and quality assured service. However, as time and lifestyle trends change overtime, companies are aware that a good service or a good product does not necessarily mean having sustainable competitive advantage over competitors because end consumers are not satisfied with just having a good product; or being assured of a good service. Most customer nowadays look for lower prices that likewise carry with it quality products and services. Relatively, customers also look for benefits that they can derive in the purchase of a certain product (Nobilis, 2008: 1-4). For that reason, it is vital for the company’s survival that every aspect within the supply chain is meticulously organized to come up with the expectation of a viable market segment that requires reduction in cost and enhancement of service. A good example for sustainable competitive advantage is attained by a Micro Incorporated who supplies electronic appliances (television, stereo, microwave oven) because it sells its products at a lower cost than any other local electronic appliance store. Additionally, it provides a five (5) year warranty on all its goods which is a longer time table compared to other electronic stores that just gives 2 years (24 months) or 3 years (36 months) warranty on the goods they sell to consumers. This is considered a good deal for consumers who not only can buy quality electronic appliances but also gets to be guaranteed of free service for a longer length of time (5 years) should anything go wrong with the goods they have bought. Question 2 a) One important ultimate objective and goal for Hapag Lloyd is being customer oriented, which fairly means that the company is completely focused on the needs and wants of its customers. If being customer oriented is done efficiently, Hapag Lloyd will be able to prolong itself in the shipping industry, since long term customers who were satisfied with the service they got will naturally come back for more (Copell, 2007: 1). To properly evaluate whether the said company is able to meet customer demands and satisfaction, it is vital to the operation that the following measurable objectives in relation to being customer oriented are take into consideration: 1) Hapag Lloyd must constantly seek ways on how to better understand customer needs, expectations and dilemmas; 2) the company must have a concise list of its customer what is updated on a regular basis; and 3) be able to design an efficient customer feedback system (Care USA, 2003:1-2). In the first measurable objective for being consumer oriented, the company will be able to determine the customers’ needs, expectations and dilemmas if Hapag Lloyd customer representatives or agents are able to share vital information with customers as this will help in building an in-depth understanding of primary issues which affects the service provision of the company. Most of the time it is hard for customers to open up, however breaking the ice will mean building trust and respect first, which should be followed by rapport and cooperation. These steps will have to come primarily from the side of the company that must be initiated as soon as possible or when the situation demands it. In actual application, if some customers ask questions or seeks to clarify some matters which concerns business with the company, then Hapag Lloyd through its representatives must immediately acknowledge any short comings or mistakes and provide the necessary corrective action (Care USA, 2003: 1-2). If this is done customers will feel that they are important and are not left to chance that could make them speculate on negative things about the company. But there may also be cases where the customer may have just misunderstood the situation that is why an issue aroused. In such circumstances an immediate need to discuss and explain things must be done, because if such cases are left unattended for much longer than necessary it would be more difficult to contain the situation later. The second measurable objective for being customer oriented is by making a list of customers or individuals with whom the company had transactions with in the past. Said list is ideally kept in the data banks of Hapag Lloyd and should contain the necessary information related to each individual. Such information may be the problems and needs of each one and some basic data regarding personal information as this will be essential in future dealings with the same client. By refining the list on a regular basis, the company will be able to discern which needs were answered and which were not. At the same time, such list will open new doors of opportunities which the company could tap at a later date. Aside from serving as a “list of things to be done and of people to talk with” this type of approach will help cultivate a strong foundation of keeping customers not only satisfied because their needs or issues were given due consideration; but will provide a more personal approach on the part of Hapag Lloyd thus gaining satisfied customers who are retained in the long run (Care USA, 2003: 1-2). The third measurable objective for being customer oriented is the installation of an efficient system which caters to customer feedback. This will enable the company to scrutinize and anticipate customer problems and needs. Hence, when customers state an issue Hapag Lloyd will be able to get back to them in a more efficient and less-time consuming manner. As stated previously, issues with customers are better acknowledged and provided with the most appropriate solution. This is where honesty comes in, because customers must be told as truthfully as possible if their issues can be tackled immediately or if there is a need for more time before the issue is resolved. It is essential within this stage to be practical and realistic, so if resolution will have to come on a later date, then the customer must be informed about it. This will of course need to include other factors affecting the issue like keeping the customer apprised of what is being done on their behalf even before the date of the said resolution is still far off. Although this process is considered to be very taxing, it will help Hapag Lloyd improve on its products and services because it will give the firm an idea about what it has done in terms of accomplishing and fulfilling the request/issues of customers (CareUSA, 2000: 1-2). Question 2 b) Hapag Lloyd manages its overall operations by using the business organizational hierarchy framework. This particular framework entails the meticulous understanding of all the factors involved with the company, whether internally or externally. Internal factors and aspects may have something to do with personnel relationship; while suppliers, distributors, competitors, partners and consumers are external aspects that have an either negative or positive effect on the company. By closely observing each individual relationship, the company is given the chance to strengthen its business organizational hierarchy framework, which is essential in the projection of revenue increase for the organization and is considered the lifeblood of the firm (Mosely, 2007: 1-3). In relation to the foregoing, the business goals or company objectives of Hapag Lloyd in the simplest form must be practical. This means that any undertaking which the company considers vital to its operations must be achievable within a reasonable timeframe. To be more definite, the objectives must be specific, measurable, achievable, results-oriented and time-based (Barker, n.d.: 1). In its effort to maintain a good name that was established long before, Hapag Lloyd must deem to pursue the following strategies: 1) providing good service; 2) maintaining its global presence; and 3) implementing a versatile marketing strategy. To be able to offer its customers good service, the company must be reliable and should come up with the expectations of each client, because the needs of each one is greatly different from the others. And since it is a company that promises to deliver goods on time, then it must be able to do so with the available tools or equipment it has on hand. In doing so, the following timeframe should be achieved: Type of Service Shipment Time Carrier Remarks Air Cargo 4 to 10 days International Airlines Depending on season and the availability of flight. Sea Cargo 30 to 45 days By land to nearest seaport and to an international shipping liner Depends on destination. Air/Sea Cargo 20 to 30 days By air to nearest seaport and to an international shipping liner. Depending on destination Courier Service 4 to 6 days Door to door delivery. DHL. FedEx, UPS Depending on destination. As a cargo shipping line, Hapag Lloyd is considered to be one of the largest around the world. With such a vast form of machinery and equipments at its disposal, the firm must do everything possible to maintain its standing within the shipping industry; because this is vital to the economic survival of the company for the years to come. In today’s’ volatile economy, what may be good and earning today may not be so good and not earning by tomorrow, hence it is crucial for the company to make its presence felt in major ports around the world. That is why it is essential for it to establish offshore offices in various countries where it is currently doing business with at the moment. The following timeline for such strategy can be done as follows in countries where the firm sees it viable to operate: Activity Duration Start Finish Site Inspection 15 to 30 days (1 month) January 01, 2011 January 31, 2011 Acquisition of legal documents/permits 30 days to 45 days (1 month to 2 months) February 01, 2011 March 15, 2011 Construction of office site 1 month March 01, 2011 March 31, 2011 Hiring of local employees 15 days March 01. 2011 March 15, 2011 Training of locally hired staff 15 days March 16, 2011 March 31, 2011 Opening of offshore office 1 day - April 01, 2011 Every company who is engage in any kind of business must do some innovative marketing or electronic selling of its name, products or services. Hapag Lloyd can keep abreast with modern advertising by using the internet and making a state of the art website that is user friendly and will cater to present and potential clients. This marketing strategy can be accomplished within the following timeframe: Activity Duration Start Finish Designing the website 2 weeks January 01, 2011 January 15, 2011 Installation of appropriate software 1 week January 08, 2011 January 15, 2011 Actual trial for the website (conducting surveys) 2 weeks January 16, 2011 January 31, 2011 Launching the website 1 day - February 01, 2011 Question 3 a) A key result area for the organization is regulatory compliance, which is normally deferred to a certain department or unit within the organization of Hapag Lloyd. The regulatory compliance is a very important key result area for the firm because before a cargo shipping company is allowed to engage in its business with other countries, or even within its own territory; it must be able to come up with the necessary licenses and environmental clearance required by the respective governments, per se (Wordpress, n.d.:1). One functional objective for Hapag Lloyd is to attain eighty-five percent (85%) customer awareness for its brand name in the company’s target market for the next two years (2 years). This functional objective needs to match with the SMART criteria, and is normally delegated to the marketing department of the company (tutor2u, n.d.: 1). In relation to the foregoing, the organization has a presence in 114 countries worldwide and currently employs six thousand employees around the globe. With this vast number of employees at hand the company is bound by international hiring policies, which necessitates that jobs abroad must be filled-up by local citizens. This policy decreases relocation operating cost for the company and the nationalization of foreign individuals. It likewise reduces chances of economic exploitation if the offshore offices are manned by local citizens. (Liagat, 2000: 1-2). A rule which Hapag Lloyd can adopt and implement is that company agents utilize a list of chosen suppliers and supply timetable. Generally, rules like this one may not be written down and is just acknowledge as a verbal instruction. It is recommended however that every rule the company has to be written down to make things clear. So, by making use of preferred suppliers and supply schedules, Hapag Lloyd can lessen costly errors, can realize its objectives better and has more chances of customer retention due to the smooth flow of its operations. Question 3 b) My strategic management evaluation for my organization will involve four (4) processes, which are: 1) situation analysis, 2) strategy formulation, 3) strategy implementation, and 4) strategy evaluation (Bushman 2007: 1-3). First and foremost, I will have to analyze the organization’s situation, wherein I will observe the internal environment of the company. This phase will include scrutiny of interactions between employees, between employees and managers, between department heads and top management, and between top management and shareholders. This stage will likewise include observation of suppliers, customers, competitors and creditors. Interviews and survey s will be the main tools I will use to analyze the internal and external environment of the company (Bushman, 2007: 1-3). The second phase of my evaluation will entail developing company strategies which will encompass using operational strategies, competitive strategies and corporate strategies. Operational strategies are dependent on the individual units or departments of the company; and are usually short-term in duration. Competitive strategies involve identifying competitors – their strengths and weaknesses; and the advantages the company has over its rivals. Corporate strategies pertain to the long haul and are a blend of various business strategies and marketing technique mix that will lead in the general direction the organization intends to go. Once I have completed the second phase wherein I have already identified the strategies for the organization, I will proceed to stage three where the strategies will be employed and put into actual practice. Stage three or strategy implementation will bring about necessary steps, techniques and procedures and how the strategies will be implemented. The execution of strategies will need to be prioritized in order, depending on the critical issues which are currently besetting the company. Last but not the least is the strategy evaluation, where I will analyze the outcome of the strategies that were implemented. At this phase I will recommend that both management and employees engaged in the evaluation process in order to determine if the strategies worked. This will mean considering if deadlines were met, if goals were achieved within a reasonable or premeditated time or if customer feedback was mostly positive and if issues were resolved at a realistic period of time (Bushman, 2007: 1-3). Question 4 Carnival Corporation is faced with a series of issues it needs to work on so it can maintain its competitive edge for the next thirty years (30 years), as follows: 1) environmental and health issues; 2) government regulations; 3) economic condition; 4) internal issues; 5) seasonality; and 6) natural disasters. For any business to be smooth sailing, Carnival Corporation must be aware of the implications of its waste matter on the environment. While it is true that such things cannot be totally eradicated it will be a big boost to the company if it adheres to international laws about the dumping of its grey and black waters. Internally Carnival Corporation must consult with its sanitary experts and try to find more means and ways on how they can keep their ships more environmentally friendly. It would not hurt to go the extra mile if Carnival Corporation will install machines that will lessen the impact of its waste during travel or while docked in port. At the very least this will get environmentalist from commenting on the company and hurting its reputation because it still has other matters to attend to. In connection to health and environmental issues, the presence of different regulations abound at every country Carnival Corporation’s ships passes by. This is another critical matter as inspections may happen at any time and each country has a different law from the other. To keep such issues at bay, the corporation must have a team of proficient lawyers who are adept at dealing with international law. Aside from this, Carnival Corporation must be aware of current changes in laws that will affect its business. It would be better that all needed documents are in order prior to sailing and must be checked meticulously before a certain ship leaves for its voyage. By having all legal documents in proper working order, the company can keep its integrity as well as its finances safe and sound. The current economic crisis affected most big corporations worldwide, and as a consequence had a negative impact on Carnival Corporation’s finances as well. Although a cut-back is expected within the corporation in order to be financially afloat it is advisable that the service they provide for their customers does not get affected. This means that the way they give their service aboard the ships in terms of accommodation and dining should not negatively affect their clientele who may feel shortchanged. This will naturally lead to customer retention, because despite the bad economy the service given will still be considered excellent. And to do away with more financial worries, Carnival Corporation like mentioned previously must keep all its documents up-to-date and in order so fines or penalties can be eradicated – as this can also make gaping holes in the company’s finances. All businesses, big or small, whether at land or at sea have internal issues to contend with. This normally has something to do with keeping skilled employees, salaries and wages, strike (for some), maintenance of equipment and other fixed assets, profitability and others. Carnival Corporation to have existed in the cruise business for some time must learn to weather out its own problems and must see to it that these problems are not carried out of the office. As much as possible management must do its best to contain internal issue because this can harm the company’s reputation, which can eventually result to loss of customers. In this regard, the corporation should have short and long term solutions to problems that have already aroused and which will still arise. It is essential that problems be resolved but equally important that unforeseen events are premeditated so that any negative impact on the overall operations does less harm. And while there may have been other circumstances which may have brought about a temporary downfall within the company’s internal operations, let it be a learning experience for top management which should not happen again. Being a cruise line company, Carnival Corporation’s services are not actually in demand all year round. This is due to many factors like the vacation time vacation goers avail of, or if those who would like to go on a cruise vacation can afford to do so at a particular time of the year. This may also have something to do with the weather, because definitely nobody would like to be aboard a ship at sea with a hurricane or storm about. The off-peak and high-peak season affects business profitability, for the profits that were gained during the high-peak season must be spread evenly for the off-peak months. However, everything must always go on as usual for a business. The company can try to come up with something for every season or month customers will look forward to, meaning the usual activities on-board and off-board ship will have to be revised and must serve as something customers will look forward to doing or seeing. Still the services provided must still be excellent, whether during the off-peak season or during the high-peak season. Discounts and packages should likewise be offered from time-to-time to accommodate the ones who would like to travel on a budget or within a group. Also, tapping a particular age group during a certain month for the off-peak period will initiate a better response if the company knows what a particular age group looks for in a cruise vacation. Doing phone surveys and email surveys can help determine this although it may be quite challenging, the results can all be worth it. Natural calamities cannot be avoided and can result to reservations being cancelled or delays in the trip particularly if the ship cannot leave the port. This can cause a financial setback for the company because if trips are cancelled then payments are either refunded or not given at all – depending on Carnival Corporation’s policy about such issues. And in circumstances when the ship is docked at port indefinitely, the company has to pay fees corresponding to the length of time it is grounded. These situations deplete the financial profitability of any cruise liner but certainly cannot be avoided. The best that can be done under such situation is to keep customers satisfied even though it may cost the company. Hence, if they make a cancellation make sure to keep their information at hand, like telephone numbers or postal addresses, this can be used for future promotions. Should the customers get stuck at port due to any natural disasters – keep them comfortable and secured bring them in-land to a hotel where they can sleep and wait out the storm. This will probably be paid for by the cruise company (Carnival Corporation) but will help in keeping customers satisfied and well cared for. By addressing all the key issues, being customer oriented and result oriented, Carnival Corporation can outlast its competitor. Because end consumers will always have the last say if a business is meant to stay. And while the company is still considering other business matters, it must always try its best to keep customers contented. Reference Page Barker, Lesley. n. d. How to Develop Business Goals and Objectives. [Online]. Available: http://www.ehow.com/how_4793182_develop-business-goals-objectives.html [29 October 2010] Bushman, Melissa. The Major Elements of the Strategic Management Process. [Online]. Available: http://www.associatedcontent.com/article/196677/the_major_element_of_the_strategic_pg3.html?cat=3 [30 October 2010] Care USA. 2003. Customer Oriented: Competency Development Planning Guide. [Online]. Available: http://careweb.care.org/help/devplan/Customer_Oriented.htm [29 October 2010] Copell, Patrick. 2007. What Does Customer Oriented Mean? [Online]. Available: http://www.contractortalk.com/id/articles/7/1/What-Does-Customer-Oriented-Mean/Page1.html [28 October 2010] Houston, Elisabeth. 2000. Understanding Distinctive Competence. [Online]. Available: http://www.di.net/articles/archive/1980/ [28 October 2010] Liagat, Hina. 2000. Organizational Policies. [Online]. Available: http://ezinearticles.com/?Organizational-Policies&id=2885895 [30 October 2010] Mosely, Marty. 2007. Understanding Relationships Within an Organizational Hierarchy Framework. [Online]. Available: http://www.information-management.com/specialreports/20070719/1087019-1.html?pg=3 [30 October 2010] Nobilis, Laura. 2008. Understanding Distinctive Competence. [Online]. Available: http://biz-development.com/SupplyChain/6.2.Sustainable-Competitive-Advantage.htm [28 October 2010] QuickMBA. 2010. Strategic Management: Core Competencies. [Online]. Available: http://www.quickmba.com/strategy/core-comptencies/ [27 October 2010] Tutor2u. n.d. Strategic Planning – Setting Objectives. [Online]. Available: http://www.tutor2u.net/business/strategy/objectives.htm [30 October 2010] Ward, Susan. n.d. Core Competency. [Online]. Available: http://sbinfocanada.about.com/od/management/g/corecompetence.htm [27 October 2010] Wordpress. n.d. Key Result Area for the Organization. [Online]. Available: http://www.humanresources.hrvinet.com/what-are-key-result-areas-kra/ [30 October 2010] Read More
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