The review of “The Core Competence of the Corporation”
Introduction
When many corporations were struggling in unstable and unpredictable competitive environment in the 1990s, the proposition of the concept of core competence became the dominant framework in management theory (Liu, 2006). This essay will review the article entitled “the core competence of the corporation” by Prahalad and Hamel from three aspects. Initially the position of the article will be analyzed compared with the Porter’s positioning perspective followed by the presentation of three theoretical assumptions of the article. In the last part, the strength and weakness of the article would be critically investigated.
The resource-based view VS Positioning view
The
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To begin with, heterogeneity of capabilities and resources of firms, which is explained as “enduring and systematic performance differences among relatively close rivals”, provides a foundation of the resource-based view (Song, et al.,2006). The implication of this assumption is that core competence conveys the valuable and unique feature of products to customers. The RBV disagrees with the opinion that the resources are homogeneous; if homogeneity is assumed to be essential to develop a proper strategy, the strategy can be easily copied by competitors, which will ultimately result in the dissipation of above-normal rents. Conversely, the unique and fixed resources on hand will lead to outstanding performance and ultimately turn to be a competitive advantage, under the circumstances that sustainable competitive advantage is achieved in an environment where competition does not exist.
Secondly, the only long-term sustainable source of uniqueness lies within the personality of the organization, in particular with knowledge. The author stresses the intangible resources, stating that “Determining whether one is winning or losing end product battles is more difficult because measures of product market share do not necessarily reflect various companies underlying competitiveness” (Prahalad and Hamel, 1990). Hall (1992) also agrees that the analysis of company’s intangible resources contributes to the strategic management
Although I found the CPA Horizon Report to be very informative, I do not feel that the report, itself, will directly assist accountants to provide their managers the right information, at the right time and in the correct format. In my opinion, the report reiterates the core values and competencies of CPAs. It discusses how these will not change, they are simply being built upon via emerging changes. The biggest change, would be the impact that technology has made; it has changed how CPAs work, and where they work. Because of technology the path of CPAs is changing. They are taking on more advisory roles, for various issues. This means that constant learning and growing will be beneficial as this profession moves into the future. While I do
Management is challenging and requires competencies distinctly different from other positions. After a brief six month tenure with my current employer, my manager resigned and a door opened for me in management. I was promoted to Claims Manager and suddenly tasked with additional responsibility and supervision of another employee. There was no job description for this position at the time and competencies had not been formally established. However, our company transitioned to competency based performance model the year following my promotion and required competencies were established. Understanding the required competencies of a Claims Manager, the skills I possessed that aligned with competencies, and the development of other competencies was essential to my success in that role.
Core competence is one of the important concepts that were introduced for the understanding of product
The core competencies that the schools have implemented have been developed by the central office, by the school themselves and by teachers within the school. I will be identifying three core competencies that I have worked with in the past year and evaluate their relevance in the school setting. I will also be looking at how the rest the school uses these competencies, along with ways that we might be able to improve upon them.
Core capabilities support competitive advantage and are hard to copy (CWMIF, 2012). Hamel and Prahalad (1990) stated strategic objectives should generate new competitive space. They should look to the future rather than glance back on the past (Vliet, 2014).
As we listen to Collis’s perception of competitive advantage - ‘Competitive advantage, whatever its source, ultimately can be attributed to the ownership of a valuable resource that enables the company to perform activities better or more cheaply than competitors.’ (David J Collis, Cynthia A Montgomery. Harvard Business Review. Boston: Jul/Aug 2008. Vol. 86, Iss. 7,8; pg. 140) - we can see that these tangible assets don’t really enable Costa to perform better than its prime competitors. It is therefore absolutely crucial, that the resources Costa utilizes respect Barney’s statement in order to enable Costa to gain competitive advantage; a resource must be: (1) Valuable in a way that it enables the company to conceive and implement strategies that develop its efficiency, (2) Rare, (3) Imperfectly imitable, and (4) Non-Substitutable (Jay Barney, (1991), “Firm resources and sustained
“Competitor Differentiation” – A core competence must be one which leverages abilities to deliver a unique offering to the marketplace (Hamel, 1996, Kindle Locations 3629). A core competency must be one which is so unique that duplication by competitors is improbable (Prahalad, 1990, p. 83).
Strategic decisions are often based on by the company can use its existing competitive advantages in the process of promoting the value and capital growth (Lynch, 2009). However, sustained competitive advantage on how to perform these operations largely depends on the company. (Porter, 2008) The need for business development and expansion has been known to promote the product and marketing innovation, which in turn prompted them to take the basis of the different organisational strategic, it’s based on products and target markets (Ansoff, 1984).
A unique ability that a company acquires from its organizers or developers and that will be not be easily or imitated. In other words Core competencies are the skills and processes for that are used to develop a company's core products and services, those products and services that will gives the business a competitive advantage over and over to other businesses and are significant for the long-term growth of the company. Core competencies are what give a company one or more competitive advantages, in creating and delivering value to its customers in its chosen field. Also called core capabilities or distinctive competencies. Core competencies are usually not only limited for a single process, but it for a combination of processes, technologies and skills. Core competency arises from the integration of different shares of the business, such as design with technological innovation. For example, Apple's sleek design, coupled with innovative products and Sony's ability to reduce electronics are core competencies for those companies. A core competency should assist the company in gaining access to a wide variety of markets; donate to the benefits of the end-product; and be difficult to duplicate.
There has been general consensus throughout the discussion that applying dynamic capabilities approach can prevent core competencies becoming core rigidities. The idea of dynamic capabilities lies in a necessity of a company to create, extend and modify its resource base, whether it would be minor continuous improvements; creation of new resources or combination of existing ones in new ways; or a complete renewing of the resource base,depending on how dynamic the environment is, in order to sustain competitive advantage and address external changes. What is important here is the managers’ perception of the environmental dynamism that providesthe basis for their ability to identify the need for changes and extend those changes when necessary. According to Amrosini et al (2009), managers who fail to identify correctly the environmental dynamism may react not accordingly to the actual environment and, thus, apply insufficient changes (risk of strategic shift), prefer predictability of routine past
Relationship marketing theory concerning competence factors draws on the strategic management literature. There, a competence is defined as “an ability to sustain the coordinated deployment of assets in a way that helps a firm to achieve its goals” (Sanchez et al., 1996, p. 8). Research on competences traces to the seminal works of Selznick (1957), Andrews (1971), Chandler
Competitive advantage isn’t gained by just using what you have. You have to reach out and get it. You have to work on having that advantage. Placing the right people in the right places can be just what you need when it comes to making the right decisions and gaining that advantage. Competitive advantage is crucial for survival of a company. Competitive advantage can be seen by looking at financial performance or by looking at customer opinions of the company. Companies have to strive to keep that
The RBV of the firm is a theory that has been explored in the academic literature as a means of explaining competitive advantage and, in turn, superior performance amongst firms. According to Barney (1991, p. 102), ``a firm is said to have a competitive advantage when it is implementing a value-creating strategy not simultaneously being implemented by any current or potential competitors''. This competitive advantage is sustainable if ``the advantage resists erosion by competitor behaviour'' (Bharadwaj et al., 1993, p. 84). The RBV was originally developed by Wernerfelt (1984) as an attempt to build a consistent foundation for the theory of business policy. Over the ensuing decade a number of academics developed this foundation further and a substantial body of literature now exists in which ``. . . many central aspects of strategic reasoning have been reinterpreted in light of a resourcebased perspective'' (Wernerfelt, 1995, p. 172). The development is far from complete, however, and there is a need ``. . . to map the space of resources in more detail'' since ``. . . `resources' remain an amorphous heap'' (Wernerfelt, 1995, p. 172). Fahy's (2000, p. 99) model (Figure 1) demonstrates the relationship between ``. . . the firm's key
In this paper, authors are exploring the concept of Dynamic Capabilities and thereby enhancing the value of Resource -based View (RBV) literature. Scholars have criticized RBV for its inability to explain the mechanism by which resources contribute to competitive advantage. Some scholars consider RBV as a vague and tautological concept. The authors attempt to address some of these concerns. The authors focus on the nature of dynamic capabilities, the impact of market dynamism on dynamic capabilities and the evolution of dynamic capabilities.
These entail organization proficiencies in efficient resource allocation and effective coordination to generate competitive edge difficult to duplicate. Lenovo did so by integrating resource-based view strategy with diverse production skills and access to emerging markets to drive its initial success. The strategic capabilities that pushed Lenovo include association with values of distinctive innovation and management capabilities (Johnson et al, 2008, p. 102).