The Core Competence of the Corporation by Prahalad and Hamel

The article was organized but not as clear in the way the points were communicated. It used logical examples of Canon and Honda to prove the importance of its points which was very useful to see practical application. Although the application was beneficial, it also made the article a bit confusing and unclear because the points were not clearly and well defined and left for interpretation.

Outline

I. Rethinking the Corporation

II. The Roots of Competitive Advantage – are differentiation

III. How not to think of Competence

  1. Not about outspending rivals on research and development.
  2. Not about shared costs

IV. Identifying Core Competencies

  1. Provide potential access to a wide variety of markets.
  2. Contributing to the perceived customer benefits of the end product.
  3. Difficult for competitors to imitate.

V. Core Competencies to Core Products – Core products are the physical embodiments of one or more core competencies.

VI. The Tyranny of SBU

VII. Developing Strategic Architecture

  1. Every company’s architecture is different and unique.
  2. The strategic architecture should make resource allocation priorities evident to the entire organization.

VII. Redeploying to Exploit Competencies

The main points of the article are the following:

–          The root system that provide “nourishment, sustenance, and stability is the core competence (82).”

–          Core competences are about the organization of work, delivery of value – primarily the strategy at work.

–          Core competences are the wellspring of new business development and should constitute the strategy of corporate level (91).

–          The core competences link the products of the company to the competencies (principles of the strategies).

After reading and reporting about the core competencies of an organization, I wish the article had clearly and boldly defined what core competencies consist of exactly. I understand they are different for every company; can someone define it, please?

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