Question at position 23 Which of the following is the best example of a firm exploiting a core competency?Monsanto's move from agricultural products to pharmaceuticalsBerkshire Hathaway's acquisition of GEICOUnited Airlines' acquisition of Westin HotelsHonda's move into lawn mowersDisney building model residential communities

Question

BlackTom AI · Accepted Answer

Core competency refers to a company’s unique set of skills, technologies, or processes that give it a sustainable competitive advantage and that can be leveraged to enter related markets or product lines.

1. Relevant knowledge points and concepts
- Core competency: distinctive capabilities (technical know-how, manufacturing processes, brand, distribution) that are hard for rivals to imitate.
- Related diversification: entering new products/markets that use existing competencies.
- Unrelated diversification: moves that do not draw on core strengths and are generally riskier.

2. Step‑by‑step reasoning
- Identify Honda’s core competencies: expertise in small internal‑combustion engines, powertrain design, efficient mass production of mechanical products, and distribution networks for gasoline‑powered devices.
- Map competency to new product: lawn mowers require small engines, reliable mechanical systems, and manufacturing processes similar to motorcycles and small engines Honda already produces.
- Conclude: moving into lawn mowers is related diversification that directly exploits Honda’s engine and manufacturing strengths.

3. Intermediate steps (explicit mapping)
- Competency A: small‑engine design → Requirement for lawn mowers: small engines (match).
- Competency B: efficient mechanical manufacturing → Requirement: produce durable mower chassis and components (match).
- Competency C: dealer/distribution networks for powered equipment → Requirement: sell/serve mowers (match).

4. Why the correct answer is correct
Honda’s move into lawn mowers uses the same technical expertise and production capabilities that constitute its core competency, allowing Honda to leverage established advantages and lower entry risk.

5. Why other options are incorrect (briefly)
- Monsanto → pharmaceuticals: shifts from agricultural biotech to drug development, which requires very different regulatory, R&D, and marketing competencies (unrelated).
- Berkshire Hathaway → GEICO: Berkshire is an investment conglomerate buying an insurer; acquisition is capital allocation, not exploiting a particular operational core competency.
- United Airlines → Westin Hotels: airlines’ core competency is air transport; hotel operations require hospitality management—largely unrelated.
- Disney → residential communities: Disney’s core is entertainment/brand management; building and managing residential communities is not primarily driven by those manufacturing/engineering competencies and is less direct.

6. Conclusion
Therefore, the best example of exploiting a core competency is Honda’s move into lawn mowers, which matches the provided answer: "Honda's move into lawn mowers."

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