Making Use of Resources, Capabilities and Core Competences. Resources, capabilities and core competences
Resources, capabilities and core competencies are the foundation of competitive advantage. Resources are bundled to create organizational capabilities. In turn, capabilities are the source of a firm’s core competencies, which are the basis of competitive advantages. Here, we define and provide examples of these building blocks of competitive advantage. 1. Resources
Broad in scope, resources cover a spectrum of individual, social and organizational phenomena. Typically, resources alone do not yield a competitive advantage. In fact, a competitive advantage is generally based on the unique bundling of several resources. For example, Ocado.com combined service and distribution resources to develop its competitive advantages. The firm started as an online retailer, directly shipping orders from the product range of Waitrose, a leading UK retailer to customers. It quickly grew and established a distribution network through which it could deliver groceries to customers’ doorsteps. With its 2010 initial public offer (IPO) to employees, managers and customers who spent more than £300, Ocado has opened retail furthermore to the internet. Lacking Ocado’s combination of resources, traditional bricks-and-mortar retailers initially found it difficult to establish an effective online presence. These difficulties led some of them to experimenting and to developing partnerships with Ocado. Through these arrangements, Ocado now handles the online presence and shipping of goods for several firms, including Waitrose – which can now focus on sales in its stores. These types of arrangements are useful to the bricks-and-mortar companies because they have little experience in shipping large amounts of diverse merchandise directly to individuals. Some of a firm’s resources (defined as inputs to the firm’s production process) are tangible, while others are intangible. Tangible...
A Review of Literature
Human Resources as a CoreCompetence
Jaree L Campbell
Mr. Gary Park
HR353 Introduction to Human Resource Management
May 4, 2013
Human Resources as a CoreCompetence
Competencies are basic qualifications necessary to achieve human resources goals. In the human resources field, actual knowledge of human resources processes is the only discipline-specific competency. Businesses consider necessary HR competencies as communication skills, negotiation skills, qualified recruitment, and strategic improvement of the perception of human capital value, human resources knowledge, effective training, ethical business practices and integrity.
Communication skills -- written and verbal -- are basic competencies all human resources staff must have. Communication is fundamental to serving the needs of internal customers as well as external customers. Within the context of HR, internal customers are current employees and external customers are applicants, job seekers, former employees and human resource services providers such as outsourcing agents.
(Article 1) Core Competencies of a Human Resource Manager
Core competencies of a human...
The Source of Sustained
• Why do some firms grow faster than
• They are able to respond to the market
forces that they face:
Market boundaries are changing more
Targets are elusive, and at best temporary.
“Organizations succeed in a
competitive marketplace over the
long run because they can do certain
things their customers value better
than can their competitors.”
Robert Hayes, Gary Pisano, and David Upton
Building on KSFs
• We saw in lecture 5 that senior managers need
to understand Key Success Factors, and Grant
tells us that they need to understand ‘General
Prerequisites for Success’, What the Customer
wants’ and ‘How to survive the Competition’, but
beyond this they have also to do something
extra, that makes customers come and buy form
them, not their competitors
Building on KSFs
• The question is, what should these things
• Well, whatever they should be – or rather,
are - collectively they are called a firm’s
• Competitive Advantage is another of
Michael Porter’s theories
We might define Competitive Advantage as:
“That thing or things about our business that
make customers come and buy from us,
rather than from our competitors.”
A big question in the world of strategy is whether
there is such a thing as a “Sustainable
Competitive Advantage” – that is, a competitive
Analyzing Resources and Capabilities
Analysts have tended to deﬁne assets too narrowly, identifying only those that can be measured, such as plant and equipment. Yet the intangible assets, such as a particular technology, accumulated consumer information, brand name, reputation, and corporate culture, are invaluable to the ﬁrm’s competitive power. In fact, these invisible assets are often the only real source of competitive edge that can be sustained over time.
—HIROYUKI ITAMI, MOBILIZING INVISIBLE ASSETS
You’ve gotta do what you do well.
—LUCINO NOTO, FORMER VICE CHAIRMAN, EXXON MOBIL
l Introduction and Objectives l The Role of Resources and l Organizational Capabilities Classifying Capabilities The Architecture of Capability l Appraising Resources and Capabilities Establishing Competitive Advantage Sustaining Competitive Advantage Appropriating the Returns to Competitive Advantage l Putting Resource and CapabilityCapabilities in Strategy Formulation
Basing Strategy on Resources and CapabilitiesResources and Capabilities as Sources of Proﬁt l The Resources of the Firm Tangible Resources Intangible Resources Human Resources
Analysis to Work: A Practical Guide
...Business Strategy Assignment
This essay will follow the course of identifying the key areas of the core competency theory that the article entitled ‘The CoreCompetence of the Corporation', written by Prahalad and Hamel, explores as well as positioning the concepts in the wider debate of theory, comparing and contrasting with other ideas from strategic theory. Secondly, this piece will look at some underlying assumptions of the business world that the article formulates when looking upon its concepts, and how these assumptions fit with other theoretical work. Thirdly, I will go on to look at the overall strengths and weaknesses of the article and its foundations.
‘Resources are an organisation’s assets and are thus the building blocks of the organisation.’ (Wheelan 2006 p106).
The article predicts that the turn of the 1990s would see top level managers attempting to utilise their workforce and product lines together in such a way to create sustainable competitive advantage. ‘A core competency is a collection of competencies that crosses divisional boundaries’. For example, Intel, ‘a leader in the semiconductor industry, is a designer and manufacturer of semiconductor components and related computers, of microcomputer systems, and of software (Pearce et al 2005, p207).’
The theory is also closely linked to another Gary Hamel review, whereby he suggests certain conditions are required for successful...
...The review of “The CoreCompetence of the Corporation”
When many corporations were struggling in unstable and unpredictable competitive environment in the 1990s, the proposition of the concept of corecompetence became the dominant framework in management theory (Liu, 2006). This essay will review the article entitled “the corecompetence of the corporation” by Prahalad and Hamel from three aspects. Initially the position of the article will be analyzed compared with the Porter’s positioning perspective followed by the presentation of three theoretical assumptions of the article. In the last part, the strength and weakness of the article would be critically investigated.
The resource-based view VS Positioning view
The underlying debate that the article reveals refers to the contradictory statements of Resource-based View (RBV) and Positioning perspective. Kogut and Zander (1995, p420) claim, “Strategy is much more than the selection of product markets and technologies of production. Above all, it is the creation and maintenance of superior organizational routines that reproduce and develop the strategy and the organization over time”. In the citation, the organizational routines refer to the management of internal resources, with the purpose of creating competitive advantages in the volatile environment (Jansson, 2008).
...C e n t r e o f M a n a g
Introduction:core competency is a concept in management theory originally advocated by CK Prahalad, and Gary Hamel, two business book writers. In their view a core competency is a specific factor that a business sees as being central to the way it, or its employees, works. A core competency can take various forms, including technical/subject matter know-how, a reliable process and/or close relationships with customers and suppliers. It may also include product development or culture, such as employee dedication, best Human Resource Management (HRM), good market coverage etc. Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value. Core competencies are the collective learning in organizations, and involve how to coordinate diverse production skills and integrate multiple streams of technologies. It is communication, an involvement and a deep commitment to working across organizational boundaries. Few companies are likely to build world leadership in more than five or six fundamental competencies. Hamel and Prahalad (1990) introduced the concept of Core Competency in a Harvard Business Review. They defined that a core competency is "an area of specialized expertisethat is the result of harmonizing...
Group No.: 03 Members: 1. Ameet Shinde 2. Nilesh Bhusal
Ref: Article CoreCompetence by C.K. Prahalad
CoreCompetence is a skill/Asset/Technology that underpins the growth of the business and differentiates the business from its current and future Competitors OR Corecompetence is a bundle of skills and technologies that enables a company to provide a particular benefit to customers e.g. • Sony – benefit is pocketability corecompetence is miniaturization • Federal Express – benefit is on time delivery corecompetence is logistics management
The concept of core competencies was developed in the management field in1990 by C.K. Prahalad and Gary Hamel in the Harvard Business Review article titled “CoreCompetence of the Corporation”
Today’s corporation must maintain competitiveness by developing core competencies Portfolio of competencies instead of a portfolio of businesses i.e. SBU’s These competencies determine the strategic architecture of the firm In the long run, competitiveness derives from an ability to build the core competencies at lower cost and faster than competitors
The Diversified Corporation
Inside Outside Corporate Strategy
• The Outside-in approach (such as the Five Forces model from Porter)...