1、1,The Core Competence of the Corporation,C.K. Prahalad and Gary Hamel,2,The importance and characters of core competencies.,2,SBU and Developing Strategic Architecture,5,Structure of this article,3,C. K. Prahalad, One of the greatest Indian business thinkers Professor of corporate strategy and inter

2、national business at the University of Michigan. Focus on next practices ,corporate strategy and the role of management in diversified multinational corporations,4,Gary Hamel, CEO of Strategos, Director of the Woodside Institute, and visiting professor of strategic management at London Business scho

3、ol Concepts : “core competence,” “strategic intent,” and “industry revolution” Created rule-breaking strategies that have generated billions of dollars in new wealth.,5,What is core competence?,Knowledge,Skills,Attitudes,Core Competence,Core competencies are the organizations collective learning and

4、 ability to 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.,6,NEC VS. GTE (1980),NEC,GTE,Business Portfolios,Telephone,Switching and transmission systems,Lighting products,Sy

5、lvania TV,Satellites,Semi- conductors,Defense systems,Digital PABX,Packet switching,Telenet, Only comparable in technological base and computer businesses No experience in telecommunications,7,GTE,NEC,21.89,16.46,1980,1988,1980,1988,A case: NEC VS. GTE,3.8,9.98,$ billion,8,NEC VS. GTE (1988),GTE,Bus

6、iness Units,Telephone,Switching and transmission systems,Lighting products,Sylvania TV,Satellites,Semi- conductors,Defense systems,Digital PABX,Packet switching,Telenet,Semiconductors,First-tier player,NEC,Telecommunications products Computers,Mobile telephones Facsimile machines Laptop computers,Wo

7、rd leader,New enter,9,NEC: Why?,Strategic intent and strategic architecture of “C Inventing new markets, creating new products, and enhancing them in vanguard(前衛(wèi)的) markets; In established market, they also made great challenge to western companies. Many examples are given here. Whats the problem in

8、many western companies?,12,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,13,End Products,Business Units,Core Products,Core Competence.,Corporation,provides nourishment, sustenan

9、ce and stability,14,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 organization of work and the diversity of value.,Core competencies are communication, inv

10、olvement 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 development. Patterns of diversification and market entry my be guided by them.,(2) T

11、he Characters of Core Competences,15,Some companies and core competencies,16,Cultivating core competence does not mean outspending rivals on research and development. Core competence does not mean shared costs, as when a two or more SBUs use a common facility-a plant, service facility, or sales forc

12、e-or share a common component.,(3) How Not to Think of Competence,So how to identify core competencies?,17,Structure:,From core competencies to core products,18,Identify core competencies three tests,Core Competencies,Identify,Core competencies provide potential access to a wide variety of market,Co

13、re competencies should make a significant contribution to the perceived customer benefits of the end products,Core competencies should be diffucult for competitors to imitate,19,Losing core competencies,Core Competencies,Lose,Outsourcing the core competencies,Having an alliance or without knowing wh

14、ere to built competence leadership,Forgoing opportunities to establish competencies,20,Two Lessons（教訓）,The costs of losing a core competence can be only partly calculated in advance. A company has failed to invest in core competence building will find it very difficult to enter an emerging market.,T

15、hrow 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.,21,From Core Competencies to Core Products,Core Competencies,Core Products,End products,Linchpin（關鍵）,The physical embodiments of co

16、re competencies,The components or subassemblies actually contributing to the value of the end products,22,Global Competition at Each Level,Core Competencies,Core Products,End products,Build or defend leadership over a long time,Build world leadership in the design and development of a particular cla

17、ss of product functionality,Seek to maximize world manufacturing share in core products,Move downstream to build brand share,23,Structure:,24,Two Concepts of the Corporation:,Competitiveness of todays products,Interfirm competition to build competencies,Portfolio of businesses related in product-mar

18、ket 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,Optimizing corporate returns through capital allocatio

19、n trade-offs among businesses,Clarify strategic architecture and building competencies to secure the future,S B U,Core Competence,25,The reconceptualization of SBU,What are the costs of this distortion?,In many companies, the SBU prism means that only one plane of the global competitive battle is vi

20、sible to top managers.,26,1.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 core competence. Corporate management m

21、ay not impose a more comprehensive view to each SBU. Result: SBU managers tend to underinvest.,27,2.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 their competence carriers. Result: T

22、he people cant get assigned to the most exciting opportunities, and their skills begin to atrophy.,28,3.Bounded Innovation,Reason: Core competence are not recognized. Result: Individual SBU will pursue only those innovation opportunities that close at hand.,Conceiving of the corporation in terms of

23、core competence,29,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 alliances Help organizations to ensure internal development effor

24、ts Reduce the investment needed to secure future market leadership Help companies to find a distinct competitive advantage A tool for communicating with customers and other external constituents.,30,What a strategic architecture should look like?,The architecture provides a logic for product and mar

25、ket 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, and core

26、competencies.,31,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 from Its customers,A map of emerging customer needs, changing technologies and core competencies.,32,Redeploying to exploit competencies,The elements of core competencie