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Core Competences andCompetition
By
Kevin Hinde
http://www.kevinhinde.com/ -
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Aims
To note the origins of core competence andconsider the distinction with the term competitive
advantage.Critically comment on the nature of core
competences using the economics andmanagement literature.
To let students share their experiences of whatthey believe their core competences to be.
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Origins of the term
Environmental school
Resource Based schoolPrahalad and Hamel
Core competence versus competitive
advantage.
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Core Business: the case of UK
Local Authority Financial Services
Shaping core business as privatisation of
local government services prevails.Chief Finance Officers consider what is
core and what is peripheral business
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Key Questions being asked of
Public Services
Why should the ownership of the
organisation matter if society is faced withthe inefficient and ineffective provision of
public services?
What is it about present public provision
that gives it the right to continue in thatactivity?
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Core Competences. Where arethey to be found?
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Core Competences (1)
Distinguish between
Necessary ResourcesUnique Resources
Threshold Competence
Core Competence
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Core Competences (2)
Kay (1993) defined these as distinctive
capabilities which yield a competitiveadvantage.
They are features of an organisation that
cannot readily be reproduced by
competitors.
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Core Competences (3)
They provide organisations with thatspecial advantage of reducing costs,through economies of scale, scope andlearning, or of enhancing the value ofproducts or services through innovation,marketing and quality.
Core competences can vary over time andwith the strategy deployed by theorganisation.
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Core Competences (4)
They can be found in
activities or hierarchies.
Leaders.
Kay(1993) notes
Strategic Assets
Innovation
Reputation Architecture
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Core Competences (5)
Williamson has showed that whereparticipants in the exchange process
are locked-in (they have both agreed to continue withthe exchange relationship)
have invested heavily in resources (there is a highlevel of asset specificity)
have asymmetric information, andengage in a frequent number of transactions
Moral hazard and opportunistic behaviourmay result
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Core Competence (6)
Williamsons approach shows intermediate
situations between market and hierarchicalforms.
Organisations that achieve these quasi-
contractual relationships are reflecting their
core competences. For some core competence is an enabling
culture.
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Examples
Relational contracts in the public sector
service level agreements.Relational contracts in the private sector
Nissan.
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Other forces
Social Networks
Hierarchies and ClansOrganisational Routines
The role of tacit knowledge.
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And Finally
Summary
Have you covered the learning outcomes?Any Questions?
