How Does the Development of Core Competencies Provide Both Advantages and Disadvantages for an Organisation?

1642 Words7 Pages
“How does the development of core competencies provide both advantages and disadvantages for an organisation? What steps can managers take to prevent core competencies becoming core rigidities?” In today’s world competition among firms becomes globalized and more intense. In order to become superiorly competitive, companies should enhance its competencies in a way that will allow them to achieve dominant position in a market. One way of accomplishing it is by development of core competencies. Competencies are considered core if they are skillfully performed and are principal to company’s strategy and its competiveness (Thompson et al, 2013). They are result of ‘collective learning’ activities (Prohalad and Hamel, 1990), a combination of…show more content…
For instance, mentioned by some participants in the discussion, Nokia lost its leadership in production of mobile phones as they were unable to adapt to the new era of phones pioneered by Iphone. There has been general consensus throughout the discussion that applying dynamic capabilities approach can prevent core competencies becoming core rigidities. The idea of dynamic capabilities lies in a necessity of a company to create, extend and modify its resource base, whether it would be minor continuous improvements; creation of new resources or combination of existing ones in new ways; or a complete renewing of the resource base,depending on how dynamic the environment is, in order to sustain competitive advantage and address external changes. What is important here is the managers’ perception of the environmental dynamism that providesthe basis for their ability to identify the need for changes and extend those changes when necessary. According to Amrosini et al (2009), managers who fail to identify correctly the environmental dynamism may react not accordingly to the actual environment and, thus, apply insufficient changes (risk of strategic shift), prefer predictability of routine past

More about How Does the Development of Core Competencies Provide Both Advantages and Disadvantages for an Organisation?

Get Access