Article: Core Competency
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Core Competence
Contents |
According to C.K. Prahalad and Gary Hamel,core competencies is the collective learning and coordination skills behind the firm's product lines and are the source of competitive advantage and enable the firm to introduce an array of new products and services. In other words, core competencies lead to the development of core products. Core products are not directly sold to end users; rather, they are used to build a larger number of end-user products. [1]
Core competencies are the crown jewels of a firm, and needs to be carefully nurtured and developed. Firms can determine future directions based on the strengths of competencies.
Competence based perspective
This perspective argues that it is the core competencies of a firm, not discrete, individual assets which are the source of sustainable competitive advantage. The core competencies are those unique capabilities, which usually span over multiple products or markets. This approach stresses the development of the right competencies for the long term success of a firm. Core competencies are strategically flexible and dynamic by nature and, therefore, are an integral part of the organizational learning and competence building process.
Framework for identifying core competence
A structured framework for identifying the core competencies is discussed below and consists of 3 stages[2]:
- Identification of key capabilities
- Determination of competence
- Determination of Core competence
Relevance to software business
In a highly competitive and growth oriented industry like software, most of the firms to remain competitive and profitable in the long term would have to identify their core competences. For example, core competency of a software company could lie in the key skills of writing high quality software and easily usable by consumers. Maintaining overall simplicity could be important as well.
Related Readings
- Hamel, G. & Prahalad, C.K. Competing for the Future, Harvard Business School Press, Boston, 1994
- COOMBS, R., 1996. Core competencies and the strategic management of R&D. R&D Management, 26(4), pp. 345-355.
Links
References
- ↑ PRAHALAD, C., 1990. GARY HAMEL The Core Competence of the Corporation [J]. Harvard business review, 3, pp. 79-91.
- ↑ HAFEEZ, K., ZHANG, Y. and MALAK, N., 2002. Core Competence for Sustainable Competitive Advantage: A Structured Methodology for Identifying Core Competence Transactions on Engineering management, vol. 49, no. l