Core Competence of the Corporation
Business Strategy Assignment
This essay will follow the course of identifying the key areas of the core competency theory that the article entitled ‘The Core Competence of the Corporation ', written by Prahalad and Hamel, explores as well as positioning the concepts in the wider debate of theory, comparing and contrasting with other ideas from strategic theory. Secondly, this piece will look at some underlying assumptions of the business world that the article formulates when looking upon its concepts, and how these assumptions fit with other theoretical work. Thirdly, I will go on to look at the overall strengths and weaknesses of the article and its foundations.
‘Resources are an organisation’s assets and are thus the building blocks of the organisation.’ (Wheelan 2006 p106).
The article predicts that the turn of the 1990s would see top level managers attempting to utilise their workforce and product lines together in such a way to create sustainable competitive advantage. ‘A core competency is a collection of competencies that crosses divisional boundaries’. For example, Intel, ‘a leader in the semiconductor industry, is a designer and manufacturer of semiconductor components and related computers, of microcomputer systems, and of software (Pearce et al 2005, p207).’
The theory is also closely linked to another Gary Hamel review, whereby he suggests certain conditions are required for successful management innovation. He suggests the approach must be a fairly novel concept, challenging the orthodox, decentralised, western management norms. Secondly, it must encompass a range of processes, as in core competency theory, the collaboration of technological divisions and, thirdly, it is certainly part of an 'ongoing program of invention, where progress compounds over time ' (Hamel 2006: p74).
This article does well to stress the importance of small business units collaborating and communicating in order to gain from these synergies. The piece advocates that
This essay will follow the course of identifying the key areas of the core competency theory that the article entitled ‘The Core Competence of the Corporation ', written by Prahalad and Hamel, explores as well as positioning the concepts in the wider debate of theory, comparing and contrasting with other ideas from strategic theory. Secondly, this piece will look at some underlying assumptions of the business world that the article formulates when looking upon its concepts, and how these assumptions fit with other theoretical work. Thirdly, I will go on to look at the overall strengths and weaknesses of the article and its foundations.
‘Resources are an organisation’s assets and are thus the building blocks of the organisation.’ (Wheelan 2006 p106).
The article predicts that the turn of the 1990s would see top level managers attempting to utilise their workforce and product lines together in such a way to create sustainable competitive advantage. ‘A core competency is a collection of competencies that crosses divisional boundaries’. For example, Intel, ‘a leader in the semiconductor industry, is a designer and manufacturer of semiconductor components and related computers, of microcomputer systems, and of software (Pearce et al 2005, p207).’
The theory is also closely linked to another Gary Hamel review, whereby he suggests certain conditions are required for successful management innovation. He suggests the approach must be a fairly novel concept, challenging the orthodox, decentralised, western management norms. Secondly, it must encompass a range of processes, as in core competency theory, the collaboration of technological divisions and, thirdly, it is certainly part of an 'ongoing program of invention, where progress compounds over time ' (Hamel 2006: p74).
This article does well to stress the importance of small business units collaborating and communicating in order to gain from these synergies. The piece advocates that
References: Datamonitor. (2006). Body Shop International, PLC SWOT Analysis. Company Report. 1 (1), p1-10 David, F (2007) Dierickx, Y., Cool, K. (1989), Asset stock acumulation and sustainability of competitive advantage, Management Science, Vol. 35 pp.1504-11. . Douglas, F. (2004). A Platform for Innovation. Reflections. 5 (6), 1-8. Hamel, G. (2006). The Why, What, and How of Management Innovation. Hardvard Business Review. 84 (2), p72-84. Hitt, R et al (2005). Strategic Management. 6th ed. U.S.A: Thompson-South Western. p19-20 Krause, D Pearce, J et al (2005). Strategic Management: Formulation, Implementation, and Control. 9th ed. New York: McGraw-Hill. p207 Prahalad and Hamel Wheelen, T (2006). Concepts in Strategic Management and Business Policy. 10th ed. New Jersey: Pearson Prentice Hall. p106 Journals