While this article was written clearly, it seemed to lack the definite structure and purposefulness that the other articles we have read lately have. The article was organized of course, but difficult to follow the construction. The authors seemed to use a more intuitive approach because they didn’t give any definite guidelines for their bigger concepts. They gave lots of examples of what different businesses were doing, but didn’t go into greater detail than that. This article offers a new model of strategic thinking by basing the core of the resulting plans in certain competencies or in other words competitive advantage that companies possess in order to put themselves in a position to defend themselves against competitive forces and create end products that the consumer will be willing to purchase.
This article relates to other articles in the sense that we have to be competitive if our products want to be desired by others. This piece related to the article “How Competitive Forces Shape Strategy. The ideas in this article fit perfectly with the 10 schools of Strategy that we have been reading about and discussing in class. The authors of this article knew that when they were writing this, certain things about the way organizations were run needed to change. That was twenty years ago, and still, and there are some things that still need to change. The authors use the 10 schools to be a catalyst to start something new
Even though the article was published over ten years ago, authors C.K. Prahalad and Gary Hamel still have an article that is applicable today. It is focused on the content of strategy and what many different companies include in their own private strategies. Having such concrete examples and thoughts makes this article a very conceptual piece of writing. They gave examples using GTE, NEC, Canon, Honda, Xerox, Chrysler, Yamaha, Sony, Komatsu, Casio, Black & Decker, Thomson, JVC, Mitsubishi, Hyundai, GM, Toyota, Motorola, Matsushita, Philips, Goldstar, Sam Sung, Kia, Daewoo, and Ford. The article talks a little about the new idea at the time of ‘going global.’ This of course was a big deal at the time and it was something that all business had to make amends for in their own strategies. This almost forces the authors to use an implicit definition for strategy, because it is bound to be different for every single company. To portray the ‘essence of strategy,’ the others give a vivid picture of a tree. They use this for the idea of a diversified corporation, but it is a model that should be at the core every corporation; including everything from the trunk being the major core products to the leaves being the end product.
This article raises important questions and brings to light the fact that every corporation has a core competency, on which it must at least partially base its strategy. The quote that best captures the author’s ideas states, “Does the new market opportunity add to the overall goal of becoming the best player in the world.” This quote is key because it deals with the idea of a corporation going global, but it’s also just a good quote to consider in any decision making process.
All in all, we came away from this article with a better understanding of the idea of core competences and how to use each employee’s to the best of the company. Any company that is in need of expansion could benefit from the ideas in this article the most. Finding the core competencies in a company and analyzing them can lead to new product/service ideas for the company allowing for growth in a, possibly, very different direction than the company is currently going. By considering the strengths an organization has, one can determine what other kinds of things they would be good at.
1) Brief History of Corporation
a. In the 1980s the top executives were measured by heir ability to restructure, declutter, and delayer their corporations.
b. 1990s measured by ability to identify, cultivate, and exploit the core competencies that make their growth possible.
2) Rethinking Corporations
a. Because market boundaries are changing ever more quickly, targets are elusive and capture is at best temporary.
b. The most important thing for management to do is to create an organization capable of infusing products with irresistible functionality or creating even better products.
c. Radical change is needed in management that must assume responsibility for competitive decline.
3) Roots of Competitive Advantage
a. Short run- the company’s competitiveness comes from the price/performance attributes of current products.
b. Long run- competitiveness comes from the ability to build (at a lower price and at a quicker pace) than competitors
c. Problem in Western companies is that their adherence to concepts of the corporation that are not necessary limits the ability of the individual business to fully exploit the capabilities that the company does have.
4) Tree Model
a. Trunk and major limbs- core products
b. Smaller branches – business units
c. Leaves, flowers, and fruits- end products
d. Root system- provides nourishment, sustenance, and stability
5) Identifying Core Competencies (and losing them)
a. Provides potential access to a wide variety of markets
b. Should make a significant contribution to the perceived customer benefits of the end product
c. Should be difficult for competitors to imitate.
6) Three different planes on which battles for global leadership are waged
a. Core competence
b. Core products
c. End products
7) Tyranny of the SBU
a. Underinvestment in developing Core Competencies and Core products
b. Imprisoned Resources
c. Bounded Innovation
Ways to wean employees off the idea that they belong to any particular business
a. Expose them to a variety of business through a rotation plan
b. Periodic assignments to cross-divisional projects
c. Let them know that their careers are tracked and guided by corporate human resource professionals