Core Competencies

Overview: Core competencies lead to the development of core products. Core products are not directly sold to end-users; rather, they are used to build a larger number of end-user products. The business units of the corporation each tap into the relatively few core products to develop a larger number of end user products based on the core product technology. It has been observed that the core competencies arise from the integration of multiple technologies and the coordination of diverse production skills. There are three tests useful for identifying a core competence. A core competence should: provide access to a wide variety of markets, contribute significantly to the end-product benefits, and be difficult for competitors to imitate. Thus, if a business unit does manage to develop its own core competencies over time, due to its autonomy it may not share them with other business units. As a solution to this problem, it is suggested that corporate managers should have the ability to allocate not only cash but also core competencies among business units. Business units that lose key employees for the sake of a corporate core competency should be recognized for their contribution.

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Format: HTML | Date: Jan 2003 | Pages: 1