Hamel & Prahalad: Core Competency

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Business performance was primary based on the position of an organization in its industry and this view was criticized by Hamel and Prahalad as no common goal or corporation existed between the units. Alternatively, Porter believes that an organization should be viewed as individual business units. However, he does consider sharing resources between them which earlier idea planning ignore. This essay is going to discuss what competency is and compare with portfolio of individual business units.

A core competency is something a firm can do well and meets the following three conditions pointed out by Hamel and Prahalad. Firstly, it can provide customers benefits. Secondly, it is hard for competitors to imitate. Finally, it can be use widely in many products and markets. Hamel and Prahalad introduced this concept in 1990 Harvard Business Review article.

A core competency is a bundle of skills and technologies for a firm to provide customers benefits. Sony is an example use this idea, Sony must ensure that technologists, engineers and markets have a share understanding of customers need and of technological possibilities. There are three test must meet when firm consider to use core competency as a management strategy. These three test are can provide customer benefits, hard for competitors to imitate and can used widely in the market and product. There are many companies have the potential to build core competency but failed to do so because the top management are unable to conceive the company as anything other than collection of discrete business. Hamel and Prahalad define a business unit as focusing on end products or markets. However, the core competency is not product specific. It can be seen in broad sense which offering a wide rang of competitive advantages. For example, ‘user friendliness’ at Apple Company. Core competency can be enhanced when it is being applied and shared, but it still needs to be nurtured and protected. Core competency is the glue...
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