Strategic Organizational Leadership in Capstone Paper

Strategic Organizational Leadership in Capstone PaperOverviewChrysler Group LLC is the third largest American Automobile manuf take onurer and ordinal largest in the American market place with an 8.79% market component part on sales of 931,402 units. (Chrysler, 2010)The Chrysler Group LLC was created in 2009 through a 20% purchase of Chrysler LLC by The order Group. The Chrysler Group LLC consists of Chrysler, landrover, jam, Dodge, Mopar and Global Electric drivecars (GEM) brands of vehicles and parts. The recent alliance amid the Fiat Group and Chrysler Group LLC is said to better position both companies in the global market (Chrysler, 2010). Chrysler Group LLC dates date to 1925 when it was founded by Walter Chrysler. The original Chrysler skunk united with Daimler-Benz in 1996 to ashes Daimler-Chrysler. In 2007 the Chrysler division of Daimler-Chrysler was purchased by Cerberus Capital vigilance to form Chrysler LLC, the precursor to the current Chrysler Group LLC. F iat Group was started in 1899. Both companies have a unique history of innovative and storied outputs (Chrysler, 2010).Having survived a brief Chapter 11 bankruptcy reorganization in 2009, the company position is positioning itself for an machinemotive resurrection by choosing a back-to-basics alliance with Fiat. The collaboration spend a pennys Chrysler access to the Italian companys small-car expertise and global markets, while still manufacturing its Chrysler brands, including Dodge, Jeep, and Ram vehicles. Chryslers trademarked MOPAR (MOtor PARts) division, with its 30% market share, carries over 280,000 parts, options, and accessories for vehicle customization it expanding to incorporate Fiat parts. Chryslers GEM (Global Electric beat back Cars) suffers neighborhood electric vehicles (NEVs).Headquartered in Auburn Hills, Mich., Chrysler Group LLCs product lineup features some of the worlds some recognizable vehicles models, including the Chrysler 300, Jeep Wrangler and Ra m Truck. Fiat pass on contri juste world-class technology, platforms and powertrains for small- and medium- coatd cars, allowing Chrysler Group to continue an expanded product line including environmentally friendly vehicles.HistoryIn 1920, the president of Buick and Vice President of familiar Motors (GM) resigned his positions in the GM Corporation following political differences with founder and then-president of General Motors William Durant. This former automotive Vice President was promptly approached by a mathematical group of investors to focus his business acumen in the fledgling automotive industry on a small, financially troubled New York company called Max comfortably Motor Corporation. The one-time automotive vice president was installed as president of Maxwell Motor community (Hyde, 2003). The mans name was Walter Percy Chrysler.In short order, Walter Chrysler brought the Maxwell Motor Corporation break through of bankruptcy. The financial improvement was due in l arge part to Mr. Chrysler introducing a naked Maxwell model- the Chrysler Six (Hyde, 2003). This car was very well received by the automobile buying public and went on to sell 32,000 units in its graduation exercise year, generating a profit of over $4 million for the small company. On the heels of the winner of the Chrysler Six, Walter Chrysler changed the name of the Maxwell Motor Corporation to the Chrysler Corporation. Capitalizing on the success of the initial Chrysler model, Walter Chrysler introduced 4 additional Chrysler models k instanter as the Chrysler 50, the Chrysler 60 the Chrysler 70 and the Chrysler Imperial 80. interestingly the model deems were derived from the top speed of these new vehicles as gauged on level ground. As a point of reference, Fords Model T was, until the introduction of the new Chrysler models, the fastest road car with a top speed of 35mph. It was these new Chrysler models that caused Henry Ford to notoriously shut the doors of the Ford Motor Company for 9 months to create a replacement for the Model T. By the time Ford close its doors to redesign its offering, Chrysler had established itself as formidable competition. With sales of 192,000 of these new models, Chrysler formally became the fifth largest automobile manufacturing company in the industry (Hyde, 2003).Walter Chrysler determined that to achieve the greatest manufacturing cost efficiency, he would have to build his own plants to produce the unlike parts needed for his vehicles. The capital expenditure required to do this was estimated at $75 million. While successful, the Chrysler Corporation could not afford this capital expense and so Walter Chrysler contacted the banking family of Dillon Read and Company in New York a firm that fatefully had just purchased the Dodge Corporation from the widows of the late Dodge Brothers. Dillon Read and Company was eager to do business with the well known Chrysler Corporation. As part of the ar hunt downment, the Dodge Corporation became a division of the Chrysler Corporation. This amalgamation effectively increased the size of the Chrysler Corporation fivefold. Shortly subsequently the merger, the Chrysler Corporation unveiled its new, low cost Plymouth and Desoto models.In a reversal of strategy, Walter Chrysler ended his drive to bring all manufacturing in-house. He was wise to see that the speed with which the automotive industry was growing demanded greater flexibility that in-house manufacturing could provide. Outsourcing automobile components was much expensive but allowed for greater flexibility and a more rapid development cycle in designing new models. In this same period, Walter Chrysler made research and development a budgetary priority. look for and Development persevered at the presidency of Chrysler was This foresight allowed Chrysler to weather the Great Depression and emerge in a more sound financial position than umteen others in the automotive industry (Curcio, 2000) In 1931 , Joseph E. Fields assumed the presidency of Chrysler from Walter Chrysler and in 1936 Walter Chrysler fully handed of the daily operation of the company.At the beginning of the mid-forties the Chrysler Corporation, a longsighted with most other large American manufacturers switched to wartime production. The Chrysler Corporations Dodge, Plymouth and Chrysler models were put on hold while the company contributed to the production of wartime necessities including small ammunition, submarine nets and, perhaps most notably, B-29 bomber engines (Hyde, 2003).As American industry adjusted to post-war production needs, the Chrysler Corporation started to falter and performance began to wane. The vivacity and forward momentum that Walter Chrysler imparted to the company were no longer present. after(prenominal) the automotive technology boom of the 20s and 30s, the rate of innovate in the industry began to slow. Post-war Americas tastes began to change toward streamlined, nontraditional mo dels and, at times, at the expense of reliability and built spirit (Hyde, 2003). To some extent, flashy advertising was influencing buying decision more than quality, features and nameplate. Chrysler was detrimentally slow to react to this new America.In 1950, a long-time legal counsel for the Chrysler Corporation by the name of L. L. Colbert became president. He immediately took the reins of the company to institute managerial reforms with the help of a professional centering consulting firm. Colbert concentrated on three areas expanding into worldwide markets, centralizing corporate management and refocusing the engineering department on innovation. Despite his decisive changes, Colberts efforts did little to improve Chryslers position in the industry. In two short years, Colbert was replaced as toss of Chrysler by Lynn Townsend.In charge of the struggling company, Townsend proved to be more successful in his revival attempt. He sold, closed or otherwise divested of unproduct ive manufacturing facilities and downsized the labor military strength thereby improving efficiency. He purchased a single early model IBM computer which helped workforce reducing efforts by eliminating the need for almost 800 employees. The early 1950s saw the dawn of Total Quality Management Theory lead by pioneers in the compass including W. E. Deming and A. V. Feigenbaum (Kreitner, 2007). Townsend seemed to take notice of this movement as his most notable achievement was a focused quality improvement effort that did boost sales and allowed Chrysler to offer a warranty unprecedented in the industry thus far. To further the momentum,. Townsend undertook an aggressive marketing campaign touting the new, improved quality of Chrysler vehicles. Where Colbert had failed, Townsend succeeded Chrysler was again a stable, financially healthy and expanding corporation.As might be expected, with this new success came growth. In the midst of the American space age of the 1960s, Chrysler ex panded to include an aerospace division and became a principal subcontractor for NASAs Saturn rocket program. Townsends consistent push to grow international business resulted in Chrysler plants in 19 countries by the end of the decade.At the onset of the 1970s, the American car market was feeling the effects of a rising consumer price index, increasing competition from foreign auto manufacturers, and the first signs of the crude oil crisis. In 1969, Chrysler describe losings of almost $5 million dollars and, with an infrastructure to support he growth of the 1960s, was operating at only 65% of capacity. Chrysler met this changing market climate with a product stable that included large, expensive, gas thirsty vehicles as well as smaller more economical cars. The company seemed more content to contend with the traditional American competition than to assess the changing market demand and consequently, Chrysler was faced with an excess inventory of the vehicles the market wasnt buyi ng and a severe shortage of the vehicles the market was demanding.Despite significant price reductions to move its excess inventory, Chryslers financial fortune continued to slide. Chryslers presidency was assumed by prank Riccardo. Ricardo, with an accounting background was intent on moorage operating costs. Total employment, payroll and individual budget area were affected by the cost cutting measures. This period also marks the first efforts to import and sell vehicles manufactured overseas.Chryslers shortsightedness with regard to market demand was not over. Despite the inconsistency between what the company was manufacturing and the market was demanding, Chrysler continued to mother larger, slight efficient models right into the Arab oil embargo. In 1974, Chrysler describe an unprecedented budget deficit of over $50 million. In 1975, the damage was five times as great at over $250 million in ventes.The American auto market was severely impacted by several(prenominal) fac tors including inflation and the Arab oil embargo but Chryslers significant foreign interests were still showing a profit. This profit served to offset the domestic losses however, in 1978 Chrysler again reported losses of over $200 million. Riccardo continued to cut costs, consolidate the various divisions of the Chrysler Corporation and direct manufacturing efforts toward smaller, more efficient vehicles but the Chrysler Corporations financial health continued an unsustainable slide.Chrysler ended the 1970s on the brink of bankruptcy. The company was spared bankruptcy proceedings by national intervention in the form of a $1.5 billion lifeline loan guarantee. This loan came with conditions including the requirement that Chrysler raise $2 billion in additional money on their own and they make significant management changes. This last requirement ended the tenure of J. J. Riccardo as president of Chrysler. Riccardo was replaced by charismatic industry veteran Lido Anthony Lee Iacocc a.Where Riccardo was an accountant, Iacocca was adept at public relations and marketing. He employed these skills in communicating to both the workforce at the Chrysler Corporation and the public at large the need for federal interventionBy the mid-eighties, the company was back on track and stronger than ever before. Chrysler benefited from the combined impacts of strong industry demand and shifting consumer preferences toward pickup trucks and minivans, products that dominated Chryslers lineup.By 1997, Chrysler reported annual sales of 2.9 million vehicles, record revenues of $61 billion, and record earnings of $2.8 billion. Chryslers year-end market capitalization was $22.8 billion and its US market share crossed over 16%. Chrysler had become one of the most remunerative automotive companies in the world and had roughly $7.5 billion in cash on hand.2 Nick Colas, an analyst with Credit Suisse First Boston, declared Chrysler has a better business model for building and selling c ars than General Motors and Ford do.3As profitable as Chrysler was, however, the company was not capitalizing on the growth of the global automotive industry. Since the company had made limited investments in overseas markets up to this point, finding a partner made the most strategic sense.On May 7, 1998, Chrysler merged with Daimler, the leading German luxury car manufacturer, for $36 billion of Daimler stock, the largest trans-Atlantic merger in history. The merger was orchestrated in order to create an efficient and lean automotive powerhouse that would better compete in the global marketplace. The transaction was reported as a merger of equals in the business press. The combined company would have a market capitalization close to $100 billion.In 1997, Daimler reported revenues of $62 billion and net income of $1.8 billion. Though Daimlerwas soundly profitable and had a strong foothold in the European market with its Daimler, Mercedes-Benz, and Smart Car brands, Daimlers US mark et share was less than 1%.4 Daimlers management hoped that Chrysler would give the company greater inroads into the lucrative US automotive market with its extensive dealership cyberspace and powerful brand name.During the early 1980s, Iacoccas skills as a superb television salesman were of crucial importance as Chrysler lost nearly $1.8 billion in 1980the largest loss ever for a U.S. companyand another $475 million in 1981, before returning to the black in 1982. In August 1983 Chrysler was able to pay off the government loan guarantees seven years early, with the government making a $350 million profit on its investment. Chryslers road to recovery was a difficult one, demanding the closure of several plants and the reduction of the companys workforce. Once restructured, Chrysler scrapped its plans to diversify and divested the Gulfstream Aerospace unit it had purchased five years earlier, selling it to a New York investment firm for $825 million in early 1990. twain other units in the companys Chrysler Technologies subsidiaryElectrospace Systems and Airborne Systemswere slated for divestiture as well, which underscored Iacoccas intent to create a leaner, more sharply focused company. Meanwhile, there were two key developments in the 1980s that helped form the foundation for the mid-nineties resurgence the introduction of the minivan in 1984 and the acquisition three years later of American Motors Corporation and its Jeep brand for $1.2 billion. reorganise as such, Chrysler entered the 1990s braced for a full recovery, but the economy did not cooperate. The decline in automotive sales during the fourth quarter of 1989the companys first fourth quarter decline since 1982portended a more crippling slump to come, as an economic recession gripped businesses of all types, both domestically and abroad. Net income in 1990 slipped to $68 million, then plunged to a $795 million loss the following year, $411 million of which was attributable to losses incurred by the companys automotive operations. Mired in an economic downturn, Chrysler appeared ordain for more of the same, rather than headed toward recovery as Iacocca had hoped, but part of the reason for 1991s losses also led to the companys first step toward genuine recovery.Partly to accuse for the $795 million loss in 1991 were the soaring preproduction and introduction costs associated with Chryslers new Jeep Grand Cherokee and increased production costs at the companys St. Louis minivan plant. These two types of vehiclesminivans and recreation utility vehiclesrepresented the key to Chryslers recovery. The popularity of these vehicles, coupled with significant price advantages over Japanese models, fueled Chryslers resurgence. In 1992, Chrysler turned its $795 million loss the year before into a $723 million gain. It was a signal achievement, accomplished in Iacoccas last year as CEO. Taking over during 1992 was Robert Eaton, who was hired away from GM, where he was head of European o perations. Chrysler then went on to enjoy its most successful year ever, with 1994 earnings of $3.7 billion on revenues of $52.2 billion.The good news at Chrysler continued into the late 1990s, after the company managed to fend off a $22 billion buyout proposed by billionaire investor Kirk Kerkorian in 1995. The long prosperity and low gasoline prices of the middle to late 1990s created a massive demand for large vehicles, and Chrysler was producing hot models in each of the hottest segments the Dodge Ram pickup truck the Town Country minivan and several free rein utility vehiclesthe Jeep Grand Cherokee, the Jeep Wrangler, and the Dodge Durango. Questions about the quality of Chrysler products continued to pop up, but the companys share of the U.S. auto market reached as high as 16.7 share in 1996, the highest level since 1968. In 1996, the year Chrysler moved into new headquarters in Auburn Hills, Michigan, sales reached $61.4 billion.The Creation and Early geezerhood of Daiml erChryslerDaimler-Benz Chief Executive Jrgen Schrempp had concluded as early as 1996 that his companys automotive operations needed a partner to compete in the progressively globalized marketplace. Chryslers Eaton was drawing the same conclusion in 1997 based on two factors emerging around the same time the Asian economic crisis, which was cutting into demand, and worldwide excess auto manufacturing capacity, which was looming and would inevitably lead to industry consolidation. With annual global overcapacity as high as 18.2 million vehicles predicted for the early 21st century, it became clearer that Daimler-Benz and Chrysler could survive as merely regional players if they continued to go it alone.After several months of negotiations, Daimler-Benz and Chrysler reached a merger agreement in May 1998 to create DaimlerChrysler AG in a $37 billion deal. The deal was consummated in November 1998, forming an auto behemoth with total revenues of $130 billion, factories in 34 countries on four continents, and combined annual unit sales of 4.4 million cars and trucks. The two companies fit well together geographically, Daimler strong in Europe and Chrysler in North America, and in terms of product lines, with Daimlers luxurious and high-quality passenger cars and Chryslers line of low-production-cost trucks, minivans, and sport utility vehicles. Although this was ostensibly a merger of equalsthe company set up co-headquarters in Stuttgart and Auburn Hills, naming Eaton and Schrempp co-chairmenit short became clear that the Germans were taking over the Americans. DaimlerChrysler was set up as a German firm for tax and accounting purposes, and the early 2000 departures of Thomas Stallkamp, the initial head of DaimlerChryslers U.S. operations, and Eaton (who was originally slated to remain until as late as November 2001) left Schrempp in clear command of the company.During 1999 DaimlerChrysler concentrated on squeezing out $1.4 billion in annual cost savings from the integration of procurement and other functional departments. The company organized its automotive businesses into three divisions Mercedes-Benz Passenger Cars/smart, the Chrysler Group, and Commercial Vehicles. In November 1999 DaimlerChrysler denote that it would begin phasing out the aging Plymouth brand. The Debis services division was merged with Chryslers services arm to form DaimlerChrysler Services, while DASA was renamed DaimlerChrysler Aerospace. Late in 1999 the company reached an agreement to merge DaimlerChrysler Aerospace with two other European aerospace firms, the French Aerospatiale Matra and the Spanish CASA, to form the European Aeronautic Defence and Space Company (EADS). DaimlerChrysler would hold a 30 share stake in EADS, which would be the largest aerospace firm in Europe and the third largest in the world.In early 2000, DaimlerChrysler set the lofty goal of becoming the number one automaker in the world within three years. The companys most pressing needs w ere to bolster its presence in Asia, where less than 4 percent of the companys overall revenue was generated, and to gain a larger share of the small car market in Europe. Filling both of these bills was DaimlerChryslers purchase of a 34 percent stake in Mitsubishi Motors Corporation for $2 billion, a deal announced in late March. The company later increased its interest in Mitsubishi when it purchased a 3.3 percent stake from Volvo. In another key early 2000 development, DaimlerChrysler agreed to join with GM and Ford to create an Internet-based global business-to-business supplier change over named Covisint.DaimlerChryslers lofty goal would remain unrealized however, as the company faced a host of challenges. The Chrysler Group division was plagued by high costs and light-headed sales which ultimately cost James P. Holden his CEO position. Buoyed by its strong sales in the mid-1990s, Chrysler had spent heavily on product development in the late 1990s and bolstered its work force while costs were skyrocketing. By the second half of 2000 Chrysler lost $1.8 billion while spending over $5 billion. Dieter Zetsche was tapped to reorganize the faltering U.S. division. He launched a major restructuring effort in February 2001 that included cutting $2 billion in costs, making additional cuts in supplier costs, slashing 20 percent of its workforce, and making changes to Chryslers product line that included the elimination of the Jeep Cherokee (the Grand Cherokee remained in the product line) and the launch of the Jeep Liberty.At the same time, global economies began to weaken in the aftermath of the September 11, 2001, terrorist attacks. To entice clients, car makers began offering buyer incentives that began to wreak havoc on profits. intentness analysts began to speculate that the 1998 merger may have been a mistakeSchrempps proclamation that the deal would create the most profitable car maker in world had so fallen short. In fact, the companys market capitaliza tion was $38 billion in September 2003. Before the union Daimlers market cap had been $47 billion.Meanwhile, the companys Mercedes division out of use(p) along launching the E-Class sedan, the SLK roadster, and the Maybach luxury vehicle. In 2003, Chrysler launched the Crossfire, a roadster developed with Mercedes components, and the Pacifica, a SUV/minivan. It also began to heavily market its powerful Hemi engine, which could be purchased for the Dodge Ram pickup and its passenger cars. In early 2004, Chryslers 300C sedan and the Dodge Magnum sports wagon made their debut.Competition remained fierce in the auto industry prompting DaimlerChrysler to make several changes in its strategy. In December 2003, the company sold its MTU Aero Engines business. That year the firm acquired a 43 percent stake in Mitsubishi Fuso Truck and great deal Corporation hoping to cash in on Asias growing truck market. Perhaps its most drastic move, however, came in April 2004 when DaimlerChryslers supe rvisory board voted against providing funds to bailout Mitsubishi Motors, which by now was struggling under losses and a huge debt load. Mitsubishi played a crucial role in Schrempps Asian expansion strategy and it developed the platforms for Chryslers ram and midsize cars. The failure to provide funds put a strain on the business blood between the two and threatened to result in huge problems for Chrysler, which had cut back on engineering capacity as it relied on Mitsubishi to develop its small and mid-sized cars.At the same time, DaimlerChrysler moved ahead in the Chinese marketwithout Mitsubishi and without another partner, Hyundai. To bolster is presence in the region, DaimlerChrysler restructured its joint venture with Beijing Automotive Industry Holding Co. Ltd. and set plans in motion to tie up with Chinese Fujian Motor Industry Group and the Taiwanese China Motor Corporation to launch several cars in the Chinese market by 2005. Rumors circulated that DaimlerChryslers rela tionship with Hyundai was faltering as a result, and in 2004 the company signaled that it would sell its interest in the South Korean automaker.By 2004, Schrempps DaimlerChrysler was a far cry from what the 1998 merger promised to deliver. The companys financial record was lackluster, bogged down by Chryslers $637 million loss in 2003. DaimlerChrysler remained the worlds number three car maker, leaving the 2000 goalto become the number one auto company in the worldunfulfilled. Whether the merger would provide the hoped-for results remained to be seen.Literature ReviewLeadership is the process through which one individual influences the attitudes perceptions and motivations of other members of a group toward the achievement of a specific group or organizational goal (Greenberg Baron, 2008). Strategic leadership, by extension, is a leaders ability to foresee and proactively act on external conditions, and empower group members to implement change toward the strategic plan as necessar y (Kreitner, 2007). Strategic change therefore is that change that happens as an organization moves toward the attainment of their strategic plan. (Kreitner, 2007).Strategic leadership is serves several functions, includes extending managerial influence through other group members, and makes organizations more able to successfully light upon the need for change that is brought by ever quickening change in the market and market forces (Nickels et al., 2002). The ability to understand and analyze internal realities as well as market forces is a necessary component of strategic leadership. With this information in-hand, it is then necessary to perform complex information analyses. Appling a strategic management process successfully will aid in bringing about effective strategic leadership (Hitt and Keats, 1992).As this description suggests, strategic management is not without complexities, but it is critically necessary for successful strategic leadership. Many organization in todays business environment fall victim to the over-managed, under-led paradigm and so the understand and successful implementation of strategic leadership is more important than ever (Kreitner, 2007).The successful application of strategic leadership starts at the top. By virtue of his or her position, the CEO should not consider delegating this specific duty to lower management. Once the CEO is effectively practicing strategic management, his or her methods may be choose by other managers to effectively implement strategic management in the various divisions of an organization (Hitt, Ireland, and Hoskisson, 1995).Hitt, Ireland, and Hoskisson (1995) formulated a strategic leadership model which consists of sise components Determining strategic circumspection, exploiting and maintaining core competencies, developing human capitol, Sustaining effective corporate culture, emphasizing social responsibility and ethical practices, and establishing strategic controls.(1) Determining strategi c charge(2) Exploiting and maintaining core competencies(3) Developing human capital(4) Sustaining an effective corporate culture(5) Emphasizing social responsibility and ethical practices and(6) Establishing strategic controls.Determining strategic direction of an organization involves using all information available on market, competition, core competencies and well as foresight and vision to clearly define long range goals for the organization (Kreitner, 2007). Strategic intent means leveraging the firms internal resources, strengths, opportunities and core competencies to accomplish the goals that have been defined in the strategic planning process. Strategic directions give the members of the organization a clear path to attainment of the set goals (Kreitner, 2007).An organizations efforts can be considered strategic intent exists when all members of the organization or united in their pursuit of the specific benchmarks set forth by the strategic plan and belive that these goa ls are attainable and attainment will enable the organization to have a competitive advantage over other organizations in their industry. (Kreitner, 2007). Intel, Canon, and Xerox Microsoft are good example of corporations that have clearly discernable strategic intents (Loeb, 1993).Clear strategic intent requires effective strategic planning and effective strategic planning requires long range vision and foresight, usually five to ten years into the future. This long range vision must incorporate organizational and human resource strategy, design strategy, product planning strategy and information use and information governance strategy and, finally, it must provide for a system of strategic control (Hunt, 1991).Exploiting and Maintaining Core Competencies is the second of the six components. Core competencies are the internal and external resources and the frame of capabilities and expertise that give an organization its identity in the market and ultimately, its competitive adv antages. Usually, core competencies relate to an organizations ability to produce their main products, be they material of informational. whatever examples might include industrial manufacturing, research, customer interfaces and customer service, retail sales, technology or even specific patents held by the company. Unique market positioning, and unique customer benefits or product value are results of core competency and so, these things should be analyzed when determining core competency. A good question to ask is why do our customers do business with us?.A main responsibility of strategic leaders in business today is to first identify, and then confirm and grow their core competencies. Once core competencies are identified, they can then be utilized. As strategic leaders, corporate managers make decisions intended to help their firm develop, maintain, strengthen, leverage, and exploit core competencies. Exploiting core competencies involves sharing resources across units. In g eneral, the most effective core competencies are based on intangible resources, which are less visible to competitors because they relate to employees knowledge or skills. Effective strategic leaders promote the sharing of intangible resources across business units in their firms (Hitt and Keats, 1992).In many another(prenominal) large, diversified firms, core competencies are developed and applied across different units in the organization (economies of scope) to create a competitive advantage. Miller Beer, for example, has applied marketing and promotion competencies across its multiple businesses (Maruca, 1994). In many multinational corporations, the development, nurturing, and application of core competencies also facilitate managing complex relationships across business operating in different international markets. Whirlpool has emphasized competency across country borders (Lei, Hitt, and Bettis, 1990).3. Developing Human CapitalHuman capital refers to the knowledge and skill s of the organizations work force employees as a capital resource (Hitt, Ireland, and Hoskisson, 1995). Much of the development of American industry can be attributed to human capital. One-third of the gr