Final answer:
To build a global competitive advantage, a company should consider itself as a portfolio of core competencies. Focusing on core strengths allows better leveraging of expertise across products and services and prevents dilution of the brand's market position. This approach differs from managing a firm merely as a collection of profitable units or diversified products.
Step-by-step explanation:
To create a global competitive advantage, a company must be viewed as a portfolio of core competencies rather than a portfolio of businesses. The term 'core competencies' refers to a company's main strengths or strategic advantages—distinctive capabilities that allow a company to access a wide variety of markets or to provide a special value to customers. By focusing on core competencies, a company can leverage its skills and resources across various products or services, rather than spreading itself too thin over disparate businesses.
Looking at a business from a core competency perspective often leads to greater success. For instance, a company known for a particular expertise becomes synonymous with superior performance or innovative products within that area. This creates a powerful brand and reputation, which can help in differentiating from competitors and establishing a clear market position.
In contrast, viewing a company simply as a collection of profitable units or diversified products can lead to a scattered strategic focus, ultimately undermining the firm's ability to stand out in the global marketplace.