Review of Core Competence
The review of “The Core Competence of the Corporation”
Introduction
When many corporations were struggling in unstable and unpredictable competitive environment in the 1990s, the proposition of the concept of core competence became the dominant framework in management theory (Liu, 2006). This essay will review the article entitled “the core competence of the corporation” by Prahalad and Hamel from three aspects. Initially the position of the article will be analyzed compared with the Porter’s positioning perspective followed by the presentation of three theoretical assumptions of the article. In the last part, the strength and weakness of the article would be critically investigated.
The resource-based view VS Positioning view
The underlying debate that the article reveals refers to the contradictory statements of Resource-based View (RBV) and Positioning perspective. Kogut and Zander (1995, p420) claim, “Strategy is much more than the selection of product markets and technologies of production. Above all, it is the creation and maintenance of superior organizational routines that reproduce and develop the strategy and the organization over time”. In the citation, the organizational routines refer to the management of internal resources, with the purpose of creating competitive advantages in the volatile environment (Jansson, 2008).
The resource-based view of the firm highlights the internal competitive resources in formulating the strategic decisions to obtain the sustainable advantages. Barney (1991) describes the sustainable competitive advantage as the corporation’s capability to surpass its rivals in the long term. Hence, in order to maintain the competitive position in the industry, the resources should fulfill some conditions such as durability, uniqueness, non-transparency and non-replicability. The core competencies which is defined as “the collective learning in the organization, especially how to coordinate diverse production skills and
Introduction
When many corporations were struggling in unstable and unpredictable competitive environment in the 1990s, the proposition of the concept of core competence became the dominant framework in management theory (Liu, 2006). This essay will review the article entitled “the core competence of the corporation” by Prahalad and Hamel from three aspects. Initially the position of the article will be analyzed compared with the Porter’s positioning perspective followed by the presentation of three theoretical assumptions of the article. In the last part, the strength and weakness of the article would be critically investigated.
The resource-based view VS Positioning view
The underlying debate that the article reveals refers to the contradictory statements of Resource-based View (RBV) and Positioning perspective. Kogut and Zander (1995, p420) claim, “Strategy is much more than the selection of product markets and technologies of production. Above all, it is the creation and maintenance of superior organizational routines that reproduce and develop the strategy and the organization over time”. In the citation, the organizational routines refer to the management of internal resources, with the purpose of creating competitive advantages in the volatile environment (Jansson, 2008).
The resource-based view of the firm highlights the internal competitive resources in formulating the strategic decisions to obtain the sustainable advantages. Barney (1991) describes the sustainable competitive advantage as the corporation’s capability to surpass its rivals in the long term. Hence, in order to maintain the competitive position in the industry, the resources should fulfill some conditions such as durability, uniqueness, non-transparency and non-replicability. The core competencies which is defined as “the collective learning in the organization, especially how to coordinate diverse production skills and
References: Barney, J.B.,(1991). “Firm resource and sustained competitive advantage”. Journal of Management, pp.99-120. Hamel,G. and Prahalad, C.K.(1993). “Strategy as stretch and leverage”. Harvard Business Review, 71(2), pp.75-84 Hall, R Henry, A. (2008). Understanding Strategic Management. Oxford University Press. Linder, C. and S. Seidenstricker (2010). “The strategic meaning of ingredient brands: A resource-based analysis.” Asian Journal of Marketing. O 'Shannassy, T. and Hunter, P. (2009), “A management consultant 's guide to how strategic architecture can improve an organisation 's "bottom line"”, Singapore Management Review Peteraf, M. (1993). “The cornerstones of competitive advantage: a resource-based view”. Strategic Management Journal, 14 (3), pp.179– 191. Srivastava, S. (2005). “Managing Core Competence of the Organization”. Vikalpa , 30 (4), pp.49- 62.