THE CORE COMPETENCE OF THE CORPORATION

C.K. Prahalad and Gary Hamel

Group 7:Nguyen Thị Thu Trang.Van Thi Yen Nhi.

OVERVIEW

2. THE ROOTS OF COMPETITIVENESS.

1. THE COMPETITIVE STRATEGIES OF CORPORATION.

3. IDENTIFYING CORE COMPETENCIES.

4. LOSING CORE COMPETENCIES.

5. FROM CORE COMPETENCIES TO CORE PRODUCTS.

6. THE SBU – CORE COMPETENCE.

7. STRATEGIC ARCHITECTURE.

8. EXPLOITTING COMPETENCIES.

1. THE COMPETITIVE STRATEGIES OF CORPORATION

Best-Cost provider strategy

The Five Generic Competitive Strategies

1. THE COMPETITIVE STRATEGIES OF CORPORATION

The Competitive Strategies of NEC & GTE

NEC Adopted an appropriate “strategic architecture”.Be enormous opportunities that built the competencies needed to serve all three markets: computing, communication & components business. Determined the most important “core product” – semiconductors.Aimed at building competencies rapidly and at low cost.

GTE Be required to compete in technology industry and communicated widely.

Senior executives and continued that managing independent business units.

Decentralization made it difficult to focus on core competencies.

2. THE ROOTS OF COMPETITIVENESS.

1 2 3 4 5 6 7 11 128 9 10

Business 1

Business 2

Business 3

Business 4

Core Product 2

Core Product 1

Competence 1

Competence 2

Competence 3

Competence 4

End products

2. THE ROOTS OF COMPETITIVENESS.

3. IDENTIFYING CORE COMPETENCIES.

3 tests to identify core competencies.

4. LOSING CORE COMPETENCIES.

First, the costs of losing a core competence can be only partly calculated in advance

Second, since core competencies are built through a process of continuous improvement

and Enhancement that span for longtime.

From Core Competencies to Core Products

What is core competence?

It fulfills three key criteria:

•It is not easy for competitors to imitate.

•It can be re-used widely for many products and markets.

•It must contribute to the end consumer's experienced benefits.

What are core products?

•Core products are a company's products which are most directly related to their core competence.

•Core products are central to the company's performance and make the most money that sustain the business.

From Core Competencies to Core Products

From Core Competencies to Core Products:

The tangible link between identified core competencies and end products is what we call the core products

From Core Competencies to Core Products

From Core Competencies to Core Products

(Source : The Core Competence of the Corporation by C.K. Prahalad and Gary Hamel – Harvard Business Review – May-June 1990)

The brand share only in end product markets

The manufacturing share in any core product

To maintain the market = To maximize the company’sleadership manufacturing share in core

products

From Core Competencies to Core Products

What are their Core Competencies and Core Products?

From Core Competencies to Core Products

• What is SBU?

Strategic Business Unit (SBU) is a profit center which focuses on product offering and market segment. It have:

- Discrete marketing plan- Discrete analysis of competition- Discrete marketing campaign

The Tyranny of the SBU

The Tyranny of the SBU

Focus on rivals in the market

Stress on business units’ performance

Allocate a lot of money to advertise brand name

Decentralize commanding by each business

The Tyranny of the SBU

The Tyranny of the SBU

(Source : The Core Competence of the Corporation by C.K. Prahalad and Gary Hamel – Harvard Business Review – May-June 1990)

The disadvantages to corporation from the SBU’s distortion

SBU’s distortion

Underinvestment in DevelopingCore Competencies & Core Products

Bounded InnovationIm

pris

oned

Res

ourc

es

Developing Strategic Architecture

• A strategic architecture is a road map of the future that identifies which core competencies to build and their constituent technologies.

• They are different for every company

• The architecture provides a logic for product and market diversification

Developing Strategic Architecture

• The strategic architecture should make resource allocation priorities transparent to the entire organization.

• It provides a template for allocation decisions by top management

• It helps lower level managers understand the logic of allocation priorities and disciplines senior management to maintain consistency.

Developing Strategic Architecture

A tool for communicating with customers and other external relative units.

• The Origin of VickersA division of Trinova Corporation

• The Elements of TransformationTechnologiesCustomer Needs

• The New Concept’s Goals•Development of the Capability of Competition•Certainty of the present market in the future•The new market preemption

Developing Strategic Architecture

Redeploying to Exploit Competencies

THANK YOU!

Q&A