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1、The Core Competence of the Corporation,C.K. Prahalad and Gary Hamel,The importance and characters of core competencies.,2,SBU and Developing Strategic Architecture,5,Structure of this article,C. K. Prahalad, One of the greatest Indian business thinkers Professor of corporate strategy and internation
2、al business at the University of Michigan. Focus on next practices ,corporate strategy and the role of management in diversified multinational corporations,Gary Hamel, CEO of Strategos, Director of the Woodside Institute, and visiting professor of strategic management at London Business school Conce
3、pts : “core competence,” “strategic intent,” and “industry revolution” Created rule-breaking strategies that have generated billions of dollars in new wealth.,What is core competence?,Knowledge,Skills,Attitudes,Core Competence,Core competencies are the organizations collective learning and ability t
4、o coordinate and integrate multiple production skills and technology streams. They are also about the organization of work and delivery of value in services and manufacturing.,NEC VS. GTE (1980),NEC,GTE,Business Portfolios,Telephone,Switching andtransmissionsystems,Lighting products,Sylvania TV,Sate
5、llites,Semi-conductors,Defense systems,Digital PABX,Packet switching,Telenet, Only comparable in technological base and computer businesses No experience in telecommunications,GTE,NEC,21.89,16.46,1980,1988,1980,1988,A case: NEC VS. GTE,3.8,9.98,$ billion,NEC VS. GTE (1988),GTE,Business Units,Telepho
6、ne,Switching andtransmissionsystems,Lighting products,Sylvania TV,Satellites,Semi-conductors,Defense systems,Digital PABX,Packet switching,Telenet,Semiconductors,First-tier player,NEC,Telecommunications productsComputers,Mobile telephonesFacsimile machinesLaptop computers,Word leader,New enter,NEC:
7、Why?,Strategic intent and strategic architecture of “C&C” (Computer & Communication)Constituted a “C&C Committee”Identified three interrelated streams of technology and market evolutionCared about “core product” and built strategic alliances,Structure:,(1) The Roots of Competitive Advantage,NEC:,GTE
8、:,VS,a portfolio of competencies,a portfolio of business-repeated across many industry,From 1980 to 1988, the achievements of Japanese companies-Low cost and high quality; Inventing new markets, creating new products, and enhancing them in vanguard(前卫的) markets; In established market, they also made
9、 great challenge to western companies.Many examples are given here.Whats the problem in many western companies?,In the long run, competitiveness derives from an ability to build the core competencies at lower cost and faster than competitors.,The problem in many western companies,End Products,Busine
10、ss Units,Core Products,Core Competence.,Corporation,provides nourishment, sustenance and stability,Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies.,It is also about the organizati
11、on of work and the diversity of value.,Core competencies are communication, involvement and deep commitment to working across organizational boundaries. Involves many levels of people and all functions.,Does not diminish with use. And core competencies are also the engine for the new business develo
12、pment. Patterns of diversification and market entry my be guided by them.,(2) The Characters of Core Competences,Some companies and core competencies,Cultivating core competence does not mean outspending rivals on research and development.Core competence does not mean shared costs, as when a two or
13、more SBUs use a common facility-a plant, service facility, or sales force-or share a common component.,(3) How Not to Think of Competence,So how to identify core competencies?,Structure:,From core competencies to core products,Identify core competencies three tests,Core Competencies,Identify,Core co
14、mpetencies provide potential access to a wide variety of market,Core competencies should make a significant contribution to the perceived customer benefits of the end products,Core competencies should be diffucult for competitors to imitate,Losing core competencies,Core Competencies,Lose,Outsourcing
15、 the core competencies,Having an alliance or without knowing where to built competence leadership,Forgoing opportunities to establish competencies,Two Lessons（教训）,The costs of losing a core competence can be only partly calculated in advance. A company has failed to invest in core competence buildin
16、g will find it very difficult to enter an emerging market.,Throw out a baby with bath water in divestment decisions,When it comes to core competencies, it is difficult to get off the train, walk to the station, and then reboard.,From Core Competencies to Core Products,Core Competencies,Core Products
17、,End products,Linchpin（关键）,The physical embodiments of core competencies,The components or subassemblies actually contributing to the value of the end products,Global Competition at Each Level,Core Competencies,Core Products,End products,Build or defend leadership over a long time,Build world leader
18、ship in the design and development of a particular class of product functionality,Seek to maximize world manufacturing share in core products,Move downstream to build brand share,Structure:,Two Concepts of the Corporation:,Competitiveness of todays products,Interfirm competition to build competencie
19、s,Portfolio of businesses related in product-market terms,Portfolio of competencies core products, and business,the SBU ”owns” all resources other than cash,SBU is a potential reservoir of core competencies,Resource is allocated business by business,top management allocates capital and talent,Optimi
20、zing corporate returns through capital allocationtrade-offs among businesses,Clarify strategic architecture and building competencies to secure the future,S B U,Core Competence,The reconceptualization of SBU,What are the costs of this distortion?,In many companies, the SBU prism means that only one
21、plane of the global competitivebattle is visible to top managers.,1.Underinvestment in Developing Core Competencies and Core Products,Reasons:No single business may feel responsible for maintaining a viable responsibility.No one can justify the investment required to build world leadership in some c
22、ore competence.Corporate management may not impose a more comprehensive view to each SBU. Result: SBU managers tend to underinvest.,2.Imprisoned Resources,Reason:People who embody the unique competence are seen as the sole property of the business they grow up. SBU managers are unwilling to lend the
23、ir competence carriers.Result:The people cant get assigned to the most exciting opportunities, and their skills begin to atrophy.,3.Bounded Innovation,Reason:Core competence are not recognized.Result:Individual SBU will pursue only those innovation opportunities that close at hand.,Conceivingof the
24、corporation in terms ofcore competence,Strategic Architecture:,Whats the strategic architecture?,A road map of the future that identifies which core competencies to build and their constituent technologies.,Advantages,Motivate organizations to learn from alliancesHelp organizations to ensure interna
25、l development effortsReduce the investment needed to secure future market leadershipHelp companies to find a distinct competitive advantageA tool for communicating with customers and other external constituents.,What a strategic architecture should look like?,The architecture provides a logic for pr
26、oduct and market diversification.The strategic architecture should make resource allocation priorities transparent to the entire organization.The strategic architecture is not a forecast of specific products or specific technologies between customer functionality requirements, potential technologies
27、, and core competencies.,Example: Vickers,See the potential,Develop their strategic architecture,Make targeted acquisitions Reorganization Building administrative systems,Reap benefits,Goal: to ensure that change in technology does not displace Vickers fromIts customers,A map of emerging customer ne
28、eds, changing technologies and corecompetencies.,Redeploying to exploit competencies,The elements of core competencies belong to the whole corporate,Make a proper reward system,The positive contribution of the SBU manager should be made visible,Record transfers for the sake of building core competen
29、ce,Wean employees off the old ideas,people may be exposed to a variety of businesses through a carefully planned rotation program,In early career,In middle career,periodic assignments to cross-divisional project teams may be necessary,Competence carriers should be regularly broughttogether from acro
30、ss the corporation to trade notes and ideas,Core competencies are the wellspring of new business development,Top management must add value by enunciating(阐明)the strategic architecture that guides the competenceacquisition process.,Only of the company is conceived of as a hierarchy of core competencies, core product, and market-focused business units will it be fit to fight,Conclusion,