The Core Competence of Corporation HBR June1990-CK Prahlad and Gary Hamel

The Core Competence of CorporationHBR June1990-CK Prahlad and Gary HamelSubmitted By-Arpit Nikhra140102032

Table of ContentsIntroduction- GTE v/s NECCore CompetencyIdentifying Core CompetenciesLosing Core CompetenciesCompetencies to Core ProductsStrategic Business Unit(SBU) or CompetenceTyranny of SBUsStrategic Architecture Exploiting CompetenciesLearnings &ConclusionsReferences

Introduction-GTE v/s NEC

Diversified Organization

Core Competencyare the collective learning in the organization-to coordinate diverse production skills and integrate multiple stream of technologiesis communication, involvement, and a deep commitment to working across organizational boundariesis about harmonizing streams of technology and the delivery of value, it is also about the organization of work and the delivery of core value

Identifying Core Competencies

A Core Competency is one which provides potential access to a wide variety of marketsshould make a significant contribution to the perceived customer benefits of end productsshould be difficult for competitors to imitate.

Losing Core-CompetencyCompanies judge competitiveness on basis primarily on the basis of price/performance of end-products.Considering internal investment towards developing core-competencies as cost centers and resulting in severe cuts in budgets Outsourcing further prevents companies to build their own core-competencyForgoing opportunities to establish competencies that are evolving in existing businesses.

Competencies to Core ProductsCore Products are the sub-assemblies that actually contribute to core productOrganization need to maximize their share in the core productsA dominant position in the core product allows company to shape the evolution of applications and end marketsWell targeted core products can lead to economies of scale and scope.

SBU or Core-Competence

Tyranny of SBUs

The issues in SBUs are-Underinvestment in developing core competenciesImprisoned ResourcesBounded Innovation

Strategic ArchitectureA strategic architecture is the road-map of the future that identifies which core competencies to build and their constituent technologiesArchitecture should provide impetus towards learning from alliances and developing internal competenciesProvide a template for resource allocationThrough Strategic Architecture the organization identifies the linkages that can help it develop dependencies of different SBUs on each otherStrategic architecture will be different across companies

Exploiting CompetenciesSBUs should bid for competencies as they bid for capitalCompanies should ensure that competencies are not held hostage by a particular businessIdentification of key businesses and key peopleCore competencies should be reallocated as per the need of other businesses by corporate management.Removal of any reward systems that focus on only product line results

LearningsThere are three different planes on which battle for global leadership are waged-Core CompetenceCore ProductEnd ProductsThe core competence of an organization is one that leads to the core product development leading to an End-product.To build or defend leadership over the long run an organization needs to be winner at each level

ConclusionOrganizations should concentrate on developing core competency across its line of businesses cumulatively rather than individually or focusing on end results in form sales , revenue or profitability.

Referenceshttp://www.valuebasedmanagement.net/methods_corecompetence.htmlThe core competency of corporation-HBR-May June 1990 by CK Prahlad and Gary Hamel.http://secure.com.sg/courses/ICI/Grab/Student_Presentations/A02_G18.pdf