Core competencies

Group D: Joohyun Hwang, Jae-Yun Ho, Hyun Kyu Park and Snorre Gylterud

Core Competency Introduced by Prahalad, C.K. and Hamel, G. “The core competence of the corporation”,

published in Harvard Business Review (1990)Core Rigidity

Introduced by Leonard-Barton, D. “Core capabilities and core rigidities: A

paradox in managing new product development” published in Strategic Management Journal (1992)

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Internal Analysis

Core Competencies

StrategicIntent

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5/27Source: Prahalad and Hamel (1990) HBR

It provides consumer benefits It is not easy for competitors to imitate It can be leveraged widely to many

products and markets. 6/27

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WALL MART

Well-organized supply system

Everyday low prices to customer

NAVER

Various contents(ex - Knowledge in Naver)

Comfortable web surfing8/27

SONY’S MINIATURIZATION GOOGLE’S FASTEST & LARGEST SEARCH

Makes core competencies difficult to imitate.

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Diversification of business based on core competence.

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Combine multiple kinds of abilities.

Several core competencies to one business unit.

One core competency to several business unit.

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6-module program by Gallon, Stillman and Coates (1995)

1. Starting the program2. Constructing an inventory of capabilities3. Assessing capabilities 4. Identifying candidate competencies5. Testing the candidate core competencies 6. Evaluating the core competency position

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Three factors for identification of core competencies1. Provides potential access to a wide

variety of markets2. Makes a significant contribution to the

perceived customer benefits of the end product

3. Difficult for competitors to imitate

16/27Source: Prahalad & Hamel (1993) The role of core competencies in the corporation

Resources – what a firm HAS Assets – people, brand name Tangible Intangible

Capabilities – what a firm DOES Capacity or ability to integrate individual

firm resources to achieve a desired objective Develop over time

Unique combinations evolves core competencies

17/27Source: Hitt, Ireland and Hoskisson (2001) Strategic Management

Exaggerate the core competencies To much focus and effort on competencies Rewards based on relevance to

competencies

Counteract new competencies Innovation External attractiveness Obtain new knowledge

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Types Creativity-lagging environment “Unsharing” knowledge Engineering/sales cultural discrepancy Reinventing the wheel Exploding knowledge maze Path dependency in innovative ideas

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Source: Hacklin, Inganäs,Plüss and Marxt. (2005) Core rigidities in the innovation process: a structured benchmark on knowledge management challenges

Source: Walker (2004) Modern Competitive Strategy Campbell & Faulkkner (2006) The Oxford Handbook of Strategy 20/27

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Method for overcoming Core Rigidity:

Need for Dynamic Capabilities! 23/27

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25/27Source: IAPD. (2002) Core Competencies and Technical Excellence www.corning.com

Base Core Competencies

26/27Source: IAPD. (2002) Core Competencies and Technical Excellence www.kodak.com

Integration of New Technology

Joint Development with Partners

Future Prospective of product development

Important Core competencies in the future

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Questions?

Discussion issues1. Propose some other conditions for core

competencies.2. Can you think of any examples of core

rigidity?3. Timing of diversification are related to core

competencies. Think of when, where and why companies diversify their business.

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