Core competencies by ipP7R82S

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									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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Introduction and definition

   Core competencies

Identification and Rigidity

   Overcoming rigidity

        Discussion
                              3/27
  Internal            Core          Strategic
  Analysis         Competencies      Intent




Analysis of the
                                  Long-term goal




                       ?
     internal
                                      that is
environment of
                                    ambitious &
   the firm by
                                  draws from all
 identifying its
                                   levels of the
 strengths and
                                   organization.
  weaknesses




                                                   4/27
Source: Prahalad and Hamel (1990) HBR   5/27
 It provides consumer benefits
 It is not easy for competitors to imitate
 It can be leveraged widely to many products and
 markets.
                                                    6/27
Introduction and definition

   Core competencies

Identification and Rigidity

   Overcoming rigidity

        Discussion
                              7/27
        WALL MART                         NAVER




                                       Various contents
 Well-organized supply system
                                  (ex - Knowledge in Naver)
                                              


Everyday low prices to customer   Comfortable web surfing
                                                              8/27
                                             GOOGLE’S FASTEST & LARGEST
SONY’S MINIATURIZATION
                                                       SEARCH


                                                               Simplicity
                 Superior
                performance




                                               Superior    S
                                                                            > 450,000
 Scaled down                                   earch      Al
                              Fancy design                                   servers
  technology                                      gorithm




               Makes core competencies difficult to imitate.
                                                                                        9/27
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.




                                   12/27
Introduction and definition

   Core competencies

Identification and Rigidity

   Overcoming rigidity

        Discussion
                              13/27
Internal

Task

External




           14/27
   6-module program by Gallon, Stillman and
    Coates (1995)

    1.   Starting the program
    2.   Constructing an inventory of capabilities
    3.   Assessing capabilities
    4.   Identifying candidate competencies
    5.   Testing the candidate core competencies
    6.   Evaluating the core competency position

                                                     15/27
   Three factors for identification of core
    competencies
    1. Provides potential access to a wide variety of
       markets
    2. Makes a significant contribution to the perceived
       customer benefits of the end product
    3. Difficult for competitors to imitate



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

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

                                                   18/27
   Types
     Creativity-lagging environment
     “Unsharing” knowledge
     Engineering/sales cultural discrepancy
     Reinventing the wheel
     Exploding knowledge maze
     Path dependency in innovative ideas


               Source: Hacklin, Inganäs,Plüss and Marxt. (2005) Core rigidities in the innovation
               process: a structured benchmark on knowledge management challenges                   19/27
Source: Walker (2004) Modern Competitive Strategy
        Campbell & Faulkkner (2006) The Oxford Handbook of Strategy   20/27
Introduction and definition

   Core competencies

Identification and Rigidity

   Overcoming rigidity

        Discussion
                              21/27
22/27
Method for overcoming Core Rigidity:
                                  Identify the
   Identify         Develop         relation
organization’s   understanding   between core    New resource
     core          for driving   competencies     allocation
competencies         forces        & driving
                                     force




             Need for Dynamic Capabilities!
                                                            23/27
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Base Core Competencies




                  Source: IAPD. (2002) Core Competencies and Technical Excellence
                          www.corning.com                                           25/27
Integration                                                                 Joint
of New                                                                      Development
Technology                                                                  with Partners




              Source: IAPD. (2002) Core Competencies and Technical Excellence
                      www.kodak.com                                                         26/27
   Future Prospective of product development




   Important Core competencies in the future




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   Questions?

   Discussion issues
    1. 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.
                                                         29/27
e
       competencies. Think of when, where and why
       companies diversify their business.
                                                         29/27

								
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