Essay: The core competence of the corporation

The core competence of the corporation is an article written by mister Prahalad and mister Hamel. The article is about the core competences in the corporation. Core competence is the collective learning in the organization and it is a commitment to working across organizational boundaries. In the 1990’s corporations were judged by their ability to identify their core competencies to make their growth possible. But according to the author, these corporations have to rethink the concept of the corporation itself.
To write the article, the authors had some hypothesis they have investigated. The first hypothesis they investigated is that the end product of a corporation does not have to be their core competence. The second hypothesis the authors had when they started the investigation is that corporations ‘forget’ to invest in their core competences and core products. The last hypothesis the authors describe in their investigation in the article is that the core competences of the employees and managers of the corporation have to be the same to act better than their competitors.
The article is a scientific article written by two scientists who have done research before they wrote the article. The research method the authors uses is a qualitative research method using a case study. During their study, the authors have found enough examples to substantiate their findings about core competences and the struggles of corporations in the past.
The authors of the article have done some desk research to achieve above insights. Corporations have to harmonize their stream of technology within the company and delivery value, because that is what core competences are about. The core competences are the most important part of a corporation. The core competences of an organization keep the corporation from falling apart. The core competences can be compared with an engine of a vehicle, it is the motor of developing and progression. The core competences will not fade by using them, but corporations do have to take care of it, because core competences might get copied by others. The other outcome of the desk research is that a core competence is not build that easy. A corporation needs more than ambition and distinctiveness. Corporations have to look up and down their supply chains as well.
The authors have done research to the hypothesises. The end product of a corporation does not have to be their core competence. For the corporation it is very important to distinguish their products. In some cases, the end product is not their biggest source of income. Most of the time corporations produce their own end products, but also deliver half products or components to other companies. The corporations have to split these two activities and oversee what their core competence is.
When the corporations are sure what their core competences are, they have to create insight in their investments. Probably the corporation invest most of their money, time and energy in their end products, because they think it is their core product. But when they discover that the half products and components are more important to the corporation, they have to revise their investments.
Finally, the employees, managers and the entire corporation have to have the same core competences. When the SBU doesn’t develop transcend lines, the competences of the departments of the corporation will be fragmented. The (senior) managers are responsible for creating opportunities within the corporation to develop employee’s competences. This way they build a stronger position against their competitors.
According to the authors there is a scientific relevance of the core competences of a corporation. Now a day the markets and their boundaries are changing, and they’ll keep on changing, even faster than before. For corporations it is important to keep up these changes, or they’ll lose their market leader position. These changes require a lot of energy and time of the managers of the corporations. They have to think about products the customers need, even before the customers know.
According to the authors there also is a practical relevance of the core competences of the corporation. The corporations have to acknowledge their core competences to make growth possible in the dynamic markets nowadays. The SUB must give the same value as they give a value to capital. The managers must challenge the corporation and the employees to exploit the core competences of the corporation ad much as possible. With focussing on the core competences and creating a system that exploit these competences, the corporation will distinguish themselves from their competitors who can not copy them.
In the article are two relationships found. The first relationship: there is a correlation between quality and prise of a product. The competitiveness of the corporation depends on these two aspects. The second relation found in the article: It is not possible for a corporation to have an intelligence ambience of sourcing strategy if they don’t have to decided yet where they want to build competence leadership.