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The Core Competence of
The Corporation
Presented By:
Sushmita Singh
Shweta Singh
Souvik Dutta
Sumanta Roy
Section B
Perspective of Core Competences
 C.K. Prahalad
• Coimbatore Krishnarao Prahalad
• Doctorate from Harvard Business School
...
Contd...
 Gary Hamel
• Doctorate Doctorate from the
University of Michigan
• Professorship in London School of Economics
...
Introduction
 In their view a core competency is a specific factor that a
business sees as being central to the way the c...
Characteristics of Core Competency
• Core competencies are not something isolated ‘somewhere’ in the
organization, but som...
Rethinking The Corporation
 Build product for customers need but have not yet even
imagined.
 Requires radical change in...
Analysis of the Case
NEC
• Strategic architecture to
exploit the convergence
computing and
communicating (C&C).
• Acquired...
Comparison Between Sales Revenue
of NEC & GTE
The Roots of Competitive Advantage
 Low cost and high quality.
 Inventing new markets, creating new products and enhanci...
The Roots of Competitive Advantage
The Roots of Competitive Advantage
 There are major companies that have had the potential to
build core competencies but ...
How Not To Think of Competence
• In the core competencies underlying them, disparate business
become coherent.
• Unlike th...
Identifying Core Competencies And
Losing Them
 Three test to identify core competencies of a
company:
 How to identify:
...
Contd...
 How to loose:
• Get depends on outsourcing. Outsourcing may a good
shortcut for a competitive product, but may ...
Contd...
 Lessons Learned:
• The cost of losing a core competence can be only partly
calculated in advance.
• It is very ...
From Core Competencies to Core
Products
 Tangible link between identified core competencies
and end products is the “core...
From Core Competencies to Core
Products
Companies Core
Competencies
Core
Products
End
Products
Honda Unique Product
Develo...
The Tyranny of SBU
Strategic Business Unit & Core Competence
The Tyranny of SBU
 SBU put today’s competition as main focus, while it has
three damage cost:
• Under-investment in deve...
Developing Strategic Architecture
 Strategic Architecture is “a road map of the future that
identifies which core compete...
Redeploying to Exploit Competencies
 Core competencies are corporate resources and may be
reallocated by corporate manage...
Contd...
 Ways to wean key employees off the idea that they
belong in perpetuity to any particular business:
• In early c...
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The Core Competence of The Corporation

Presentation is based on the article "The Core Competence of The Corporation" by C.K. Prahalad and Gary Hamel

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The Core Competence of The Corporation

  1. 1. The Core Competence of The Corporation Presented By: Sushmita Singh Shweta Singh Souvik Dutta Sumanta Roy Section B
  2. 2. Perspective of Core Competences  C.K. Prahalad • Coimbatore Krishnarao Prahalad • Doctorate from Harvard Business School • Professorships in University of Michigan and IIM • Co-founder of Praja Inc. Where he tried his wings as an entrepreneur. • At Harvard Business School, Prahalad wrote a doctoral thesis on multinational management in two and a half years.
  3. 3. Contd...  Gary Hamel • Doctorate Doctorate from the University of Michigan • Professorship in London School of Economics • Founder and president of Strategos, an international management consultancy • Core competence, strategic intent, industry revolution 3
  4. 4. Introduction  In their view a core competency is a specific factor that a business sees as being central to the way the company or its employees to work. It fulfills three key criteria: • It provides consumer benefits. • It can be reused widely for many products and markets. • It must contribute to the end consumer’s experienced benefits. The importance of the products/services to its customers.
  5. 5. Characteristics of Core Competency • Core competencies are not something isolated ‘somewhere’ in the organization, but something collective, a combination of various types of knowledge and resources. • Organizations can have core competencies, but also parts of organizations such as individual business units or departments. • Core competencies reflect what companies can do, not what they have. Core competencies enable companies to perform critical processes that they could otherwise not perform. • Core competencies enable companies to perform processes better than their competitors. Hence, they enable companies to outperform other companies on one or more critical processes. 5
  6. 6. Rethinking The Corporation  Build product for customers need but have not yet even imagined.  Requires radical change in the management of major companies.  Understand the changing basis for global leadership.
  7. 7. Analysis of the Case NEC • Strategic architecture to exploit the convergence computing and communicating (C&C). • Acquired competencies in semiconductors. • Used collaborative arrangements to multiply internal resources. • Now a world leader in consumer electronics. GTE • No strategic architecture existed. • Decentralization made it difficult to focus on core competence. • Senior managers worked as if they were managing independent business unit. • No Mutual decision was made.
  8. 8. Comparison Between Sales Revenue of NEC & GTE
  9. 9. The Roots of Competitive Advantage  Low cost and high quality.  Inventing new markets, creating new products and enhancing them.  Also in established markets they also made great challenge to Western Companies.  Many examples are given in this articles:  Canon (personal copiers), Honda (from bikes to four wheelers).  Sony, Casio, Yamaha, Komatsu invented new devices.
  10. 10. The Roots of Competitive Advantage
  11. 11. The Roots of Competitive Advantage  There are major companies that have had the potential to build core competencies but failed because of an inability to conceive of the company as anything other than a collection of discreet business.  Management trapped in the SBU mind-set almost inevitably finds its individual businesses dependent on external sources for critical components.
  12. 12. How Not To Think of Competence • In the core competencies underlying them, disparate business become coherent. • Unlike the battle for global brand dominance, which is visible in the worlds broadcast and print media, the battle to build world class competencies is invisible to people who aren't deliberately looking for it. • Cultivating core competence does not mean outspending rivals on research and development or sharing cost between SBU. • Building core competence is more ambitious and different than integrating vertically.
  13. 13. Identifying Core Competencies And Losing Them  Three test to identify core competencies of a company:  How to identify: • Accessibility: Provide potential access to a variety of markets. • Value-creation: Make a significant contribution to perceived customer benefits of the end product. • Uniqueness: Be difficult for competitors to imitate.
  14. 14. Contd...  How to loose: • Get depends on outsourcing. Outsourcing may a good shortcut for a competitive product, but may ruin the core competencies to sustain product leadership. • Forgoing the opportunities to establish competencies that are evolving in existing business.
  15. 15. Contd...  Lessons Learned: • The cost of losing a core competence can be only partly calculated in advance. • It is very difficult to enter an emerging market if a company fails to invest in core competence building. 15
  16. 16. From Core Competencies to Core Products  Tangible link between identified core competencies and end products is the “core product”. • The components or subassemblies that actually contribute to the value of the end product.
  17. 17. From Core Competencies to Core Products Companies Core Competencies Core Products End Products Honda Unique Product Development Engines Automobiles, Motorcycles Canon Optics, Imaging and Microprocessor Laser Printer Subsystems Cameras Sony Ability to miniaturized electronics Portable Music Player Sony Walkman
  18. 18. The Tyranny of SBU Strategic Business Unit & Core Competence
  19. 19. The Tyranny of SBU  SBU put today’s competition as main focus, while it has three damage cost: • Under-investment in developing core competencies and core products • Imprisoned resources • Bounded innovation
  20. 20. Developing Strategic Architecture  Strategic Architecture is “a road map of the future that identifies which core competencies to build and their constituent technologies”.  By providing an impetus for learning from alliances and focus for internal development efforts, a strategic architecture can dramatically reduce the investment needed to secure future market leadership. 20
  21. 21. Redeploying to Exploit Competencies  Core competencies are corporate resources and may be reallocated by corporate management.  Reward system that focus only on product-line results and career path that seldom cross SBU boundaries engender pattern of behavior among unit managers that are destructively competitive.
  22. 22. Contd...  Ways to wean key employees off the idea that they belong in perpetuity to any particular business: • In early careers; they may be exposed to variety of business through carefully plane rotation program. • In mid career; periodic assignment to cross-divisional projects may necessary. 22

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