The Core Competence of the Corporation Assignment - 1

The Core Competence of the Corporation - Assignment Example Effectively, the authors stress on the collective learning of the organization, juxtaposed with technical competencies and production technologies as drivers of core competence. They suggest simple tests that can help assess the construct: i) does the competence help the firm in addressing diverse markets, ii) is it easily imitable? and iii) does the customer perceive a benefit from the end product? In the second part of the report, we apply the learnings to a civil engineering situation where there are two organizational actors: BBCL and El Dorado. We find that the potential Joint Venture could lead to development of core competencies. In the current scheme of things, both companies do not have any clear core competencies. We also analyze the firms in terms of the capabilities that they have developed over the years. The Core Competence of the Corporation 1. ... firms that have helped them differentiate their firm’s advantages from others; additionally, these key strengths, which Prahalad & Hamel (1993) term as core competencies have enabled the companies to make their mark in several products. These strengths have led the firms to sustained and profitable growth. 2. Key definitions The authors begin with an introduction to two different companies operating in the telecommunications space: GTE and NEC. The time frame studied is 1980 to 1988. While NEC started small, it ended up bigger in revenues and market share during the end of the period. This provided an impetus for the authors to try and identify what lay behind the scenes at these two telecommunication giants. One of the definitions put forth by the authors is the term ‘core competence’ itself. A core competence could be something similar to a capability developed by a company that could help establish a sustainable, defensible and profitable market position. In a competitive environment, a core competence could be a strategic asset. The next question this leads us to is this: if a capability needs to be defined as a core competence, then what criteria can be used to test it? The authors recommend three tests: 1) Does the capability help the firm compete in several product markets? 2) Can the competence or capability be easily imitated by rivals and 3) Is the customer capable of perceiving a difference because of the company’s competence in a particular domain? If the answers to all three questions are in the affirmative, then the particular competence could be termed a core competence. 3. Key Insights & Takeaways To explain with the help of an analogy, the authors use a tree with its roots, branches and fruits. The roots are akin to the core competence. They