{"id":41486,"date":"2021-07-01T17:03:29","date_gmt":"2021-07-01T21:03:29","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=41486"},"modified":"2021-07-12T17:27:01","modified_gmt":"2021-07-12T21:27:01","slug":"company-capabilities-in-business","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/","title":{"rendered":"Company Capabilities: What Are They?"},"content":{"rendered":"\n<p>What are <a href=\"https:\/\/www.shortform.com\/blog\/company-capabilities\/\">company capabilities<\/a>? How can you use capabilities in business? How do you know when to outsource?&nbsp;<\/p>\n\n\n\n<p>Company capabilities are the resources, processes, and priorities of a business. This article looks at specific examples of capabilities, whether you should outsource, and some real-life examples of capabilities in businesses.&nbsp;<\/p>\n\n\n\n<p>Find out more about company capabilities.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Understanding Company Capabilities&nbsp;<\/strong><\/h2>\n\n\n\n<p>Before outsourcing anything, companies need to fully understand their capabilities, especially which capabilities are critical to the company\u2019s future. Capabilities in business derive from three factors:<\/p>\n\n\n\n<p><strong>1) Resources: <\/strong>These capabilities include people, technology, equipment, brands, designs, information, money, and relationships with <a href=\"https:\/\/www.shortform.com\/blog\/bargaining-power-of-suppliers-understanding-michael-porter\/\">suppliers<\/a>, distributors, and customers. Resources are usually visible and measurable. Employees create value for companies when they convert resources into products and services.<\/p>\n\n\n\n<p><strong>2) Processes: <\/strong>These are the ways employees communicate, coordinate, and make decisions.&nbsp;<\/p>\n\n\n\n<p>Unlike resources, processes don\u2019t appear on a balance sheet. But while less visible, processes facilitate the use of resources to solve problems. Processes include:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The methods or systems by which products are developed and produced.<\/li><li>Methods of market research, budgeting, <a href=\"https:\/\/www.shortform.com\/blog\/personnel-development\/\">employee development<\/a>, compensation, <a href=\"https:\/\/www.shortform.com\/blog\/resource-allocation-examples\/\">resource allocation<\/a>, and so on.<\/li><\/ul>\n\n\n\n<p>Strong processes work regardless of who performs them (employees doing them are more or less interchangeable).<\/p>\n\n\n\n<p><strong>3) Priorities: <\/strong>This may be the most important of the three factors determining company capabilities. Priorities guide a company\u2019s decisions, including what the company invests in and chooses not to invest in. Leaders need to communicate clear <a href=\"https:\/\/www.shortform.com\/blog\/business-priority\/\">company priorities<\/a> so employees make decisions aligned with the company\u2019s priorities and strategy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Deciding When to Outsource<\/strong><\/h3>\n\n\n\n<p>In applying the theory of company capabilities to determine when outsourcing makes sense, a company must do two things:<\/p>\n\n\n\n<p>1) Understand that your suppliers\u2019 capabilities can and will change; to get a sense of how they might change, watch what your suppliers are striving or aspiring to do in the future.<\/p>\n\n\n\n<p>2) Understand what capabilities your company will need to succeed in the future. Always keep these capabilities in-house; otherwise, you\u2019re giving away your future.<\/p>\n\n\n\n<p>Understanding the value of company capabilities differentiates a good CEO from a poor one. Here are two examples of outsourcing gone awry:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Dell:<\/strong> Dell was a highly successful U.S. computer manufacturer in the 1990s. It saved money, for which it was applauded by Wall Street, by outsourcing the manufacture of components to the Taiwanese company Asus. It started with circuits, then motherboards, then continued until Asus was putting together Dell computers in their entirety. Once Dell had outsourced all its major capabilities to Asus, the Taiwanese company used what it learned to launch its own computer brand.<\/li><li><strong>U.S. semiconductor manufacturing:<\/strong> American companies outsourced basic semiconductor assembly to Taiwanese and Chinese suppliers, while retaining control of more complicated and profitable aspects like design. However, Asian suppliers kept moving upmarket, increasing their capability to make complex products. Today, U.S. companies outsource sophisticated products and components to Asian companies because U.S. facilities can no longer make them.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>What are company capabilities? How can you use capabilities in business? How do you know when to outsource?&nbsp; Company capabilities are the resources, processes, and priorities of a business. This article looks at specific examples of capabilities, whether you should outsource, and some real-life examples of capabilities in businesses.&nbsp; Find out more about company capabilities.<\/p>\n","protected":false},"author":12,"featured_media":37734,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,81],"tags":[411],"class_list":["post-41486","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-economics","tag-how-will-you-measure-your-life","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Company Capabilities: What Are They? - Shortform Books<\/title>\n<meta name=\"description\" content=\"For success in business, company capabilities have to be considered. 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Read this article to find out how to use them to your advantage.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2021-07-01T21:03:29+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-07-12T21:27:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2021\/06\/business-contract-colleagues-paperwork.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Elizabeth Shaw\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@rina\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Elizabeth Shaw\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/\"},\"author\":{\"name\":\"Elizabeth Shaw\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/df3c3c8448816a34bfdc78d7eda164c4\"},\"headline\":\"Company Capabilities: What Are They?\",\"datePublished\":\"2021-07-01T21:03:29+00:00\",\"dateModified\":\"2021-07-12T21:27:01+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/\"},\"wordCount\":494,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/06\/business-contract-colleagues-paperwork.jpg\",\"keywords\":[\"How Will You Measure Your Life?\"],\"articleSection\":[\"Business\",\"Economics\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/\",\"name\":\"Company Capabilities: What Are They? - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/company-capabilities-in-business\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/06\/business-contract-colleagues-paperwork.jpg\",\"datePublished\":\"2021-07-01T21:03:29+00:00\",\"dateModified\":\"2021-07-12T21:27:01+00:00\",\"description\":\"For success in business, company capabilities have to be considered. 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