Core Competence of the Corporation

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Business Strategy Assignment This essay will follow the course of identifying the key areas of the core competency theory that the article entitled ‘The Core Competence 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…show more content…
Dierickx and Cool (1989) propose a more wholesome resource based view as a means to competitive advantage by stating that resources used in the production of products must be strongly linked to the firm, with their origins lying in organisational skill and learning. This therefore supports the assumption that developing company specific core competencies, heavily reliant upon the knowledge of integrated systems and departments working together to create a ‘high component of immobility’ (Dierickx and Cool 1989 p83) from one company to another, will lead to sustained competitive advantage. Another assumption of the article is that those companies with more traditional management styles require radical change to be able to keep apace with the technological advancements of the future. Dr. Frank L. Douglas (2004), executive vice president of Aventis, suggests that ‘traditional management practices – reporting structure, incentives - do little to support most knowledge work’ (p1). Douglas advocates a sustained period of observation over teams of which you are responsible for. This is to understand how the knowledgeable workers in the company like to operate and therefore to gain an understanding of the direction of the team. He also implies that everyone in the innovation process must take part in the evaluation practice so the team can progress sufficiently and become a ‘Hub for Innovation’ (p1). From this, strategists implementing core
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