Core Competence model of Hamel and Prahalad is a corporate strategy model
that starts the strategy process by thinking about the core strengths of an
Inside-out Corporate Strategy
The Outside-in approach (such as the
Five Forces model from Porter)
places the market, the competition, and the customer at the starting point
of the strategy process. The Core Competence model does the opposite by stating
that in the long run, competitiveness derives from an ability to build a Core
Competence, at lower cost and more speedily than competitors. The Core Competence
may result in unanticipated products. The real sources of advantage are to
be found in management's ability to consolidate corporate-wide technologies
and production skills into competencies, through which individual businesses
can adapt quickly to changing circumstances. A Core Competence can be any
combination of specific, inherent, integrated and applied knowledge, skills
In their article "The Core Competence of the Corporation" (1990), Prahalad
and Gary Hamel dismiss the portfolio perspective as a viable approach to corporate
strategy. In their view, the primacy of the Strategic Business Unit is now
clearly an anachronism. Hamel and Prahalad argue that a corporation should
be built around a core of shared competences. Compare:
Business units must use and help to further develop the CC(s). The corporate
center should not be just another layer of accounting, but must add value
by articulating the strategic architecture that guides the process of competence
Three tests for identifying a Core Competence
Provides potential access to a wide variety of markets.
Makes a significant contribution to the benefits of the product as perceived
by the customer.
A CC should be difficult for competitors to imitate.
Building a Core Competence
A Core Competence is built through a process of continuous improvement
and enhancement (compare: Kaizen). It should
constitute the focus for corporate strategy. At this level, the goal is to
build world leadership in the design and development of a particular class
of product functionality. Top management can not be just another layer of
accounting, but must add value by articulating the strategic architecture
that guides the process of competence building.
Once top management (with the help of Strategic Business Units managers)
have identified an all-embracing Core Competence, it must ask businesses to
identify the projects and the people that are closely connected with it. Corporate
auditors should perform an audit of the location, number, and quality of the
people related to the CC. CC carriers should be brought together frequently
to share ideas.
Care must be taken not to let core competencies develop into core rigidities.
A Corporate Competence is difficult to learn, but is difficult to unlearn
as well. Companies that have spared no effort to achieve a competence, sometimes
neglect new market circumstances or demands. They risk to be locked in by
choices that were made in the past.
Prahalad, Gary Hamel - The CC of the Corporation
Book: Michael Goold,
Andrew Campbell - Corporate-Level Strategy
Book: C.K. Prahalad,
Gary Hamel - Competing for the Future
Forum discussions about Core Competence. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
Always link Strategy to CC
Core competencies are the activities in which any organization does exceedingly well and they are always built over time. Therefore corporate strategies should be linked to CCs....
Core Competences and Porter's 5 Forces
Core competencies are like one pole of a magnet, opposite poles always attract each other. The other pole is customer's expectation's or the gap filling.
How you use your CC's with ref to Porter's Fi...
Is CC REALLY Different from FF?
The trouble with this article and concept is that it begins by suggesting that CC is opposite to Porter's FF approach in that it places CC at the start as opposed to FF which places market, competitio...
Leadership & Core Competence
Resources that might be easily available will not enable a business to achieve a competitive advantage over rivals. If a core competence yields a long term advantage to the company, it is said to be a...
Core Competency Should be Challenged
A Core Competency should be difficult for competitors to imitate. But I would like to add that it should also be challenged from time to time by the competitors. Otherwise it will fail to deliver desi...
Integrating the Core Competence
Having identified the core competence of the organisation, the real challenge - particularly in knowledge intensive organisations - lies ahead in integrating it with the competences of its people so a...
Outside- in vs. Inside-out
I think the debate on the wisdom of an "outside- in" vs. "inside-out" approache is misplaced. CC is clearly the latter but unless you match your CC with market opportunities, CC will not yield desired...
Defining New Services / Capabilities
How can we come up with ideas to develop new services, based on current internal strength of existing services and capabilities?
What techniques can be used? Please share your thoughts, thank you for...
Examples of Core Competences
Here are few examples of Core Competencies you frequently see in literature on CCs:
Apple: user-friendly design of electronic consumer devices
Intel: innovative design and manufacturing of computer ...
The Role of AI in Core Competence
Do you think Artificial Intelligence (big data, self-learning software, digital networks, algorithms) can be a core competence of certain firms like Google or Amazon?
Do you think ANY firm will need ...
The best, top-rated topics about Core Competence. Here you will find the most valuable ideas and practical suggestions.
Why Protect Core Competence?
Why should a firm ensure its core competence is hard to imitate?
The whole market should be made aware about a firm's Core Competence (CC) and the firm should use it in their marketing/branding activ...
CC as an Organisational Trait(s)
Try to define your organisation's Core Competency and you find yourself with the same problem as trying to identify your son's talent! He may be a good runner, but, not good enough.
Many companies do...
The Virtual Company and Core Competences
It's interesting to consider a Virtual Business when you are thinking about Core Competences:
1. The Virtual Company focuses as much as possible / entirely on its own Core Competence (Typically Marke...
Utilizing a Core Competence
Once an organization has defined its Core Competence, finding or creating new markets to leverage the CC becomes a crucial task. Who can give some advise or suggest a generic method how such markets c...
Value Disciplines, Customer Strategy, Customer Intimacy, Customer-oriented, CRM Customer / Consumer Centricity (CC) is a frequently used concept used by companies to achieve competitive advantages. It...
Business Strategy, Corporate Strategy, Competitive Advantage, Strategy Education Most organizational performance theories assume that there are certain “best practices”, or “best ways” that are needed ...