Core Competence model
The Core Competence model given by Hamel and Prahalad is a corporate strategy model that initiates the strategy procedure by thinking about the major strengths of an organization.
Inside-out Corporate Strategy
The Outside-in approach positioned the market, the customer and the competition at the starting point of the strategy process. The Core Competence model does the reverse by stating that in the long time, competitiveness draws from from an ability to construct a Core Competence, at lesser cost and more promptly than competitors. The Core Competence can result in unexpected products. The actual sources of advantage are to be originating in management's ability to merge corporate-wide technologies and production abilities into competencies, by which individual businesses can adapt rapidly to changing circumstances. A Core Competence can be of any arrangement of inherent, specific, integrated and applied knowledge, attitudes and skills.
Three tests for determining a Core Competence
1. Give a major contribution to the benefits of the product as supposed by the customer.
2. Gives potential access to a broad diversity of markets.
3. A CC must be hard for competitors to copy.
Building a Core Competence
A Core Competence is made by a process of constant improvement and enhancement. It should comprise the focus for corporate strategy. At this stage, the objective is to construct world leadership in the design and expansion of a particular class of product functionality. Top management cannot be simply the other layer of accounting, but have to add worth by articulating the strategic architecture that directs the procedure of competence building.
Once top management (with the assistance of Strategic Business Units managers) has found an all-embracing Core Competence, it should ask businesses to recognize the projects and the people that are closely linked with it. Corporate auditors must carry out an audit of the location, quality, and number of the people associated to the CC. CC carriers must be brought together to share ideas.
Core Group Theory
The real objective of the modern corporation
Kleiner develops the bold statement that what comes first in any organization is: putting the Core Group satisfied. And still, as per the Kleiner, Core Groups are not inherently bad. They are rather essential and even the best hope we have for ennobling humanity, as organizations are natural amplifiers of human ability. An organization's Core Group is also the resource of its energy, direction and drive. Or more precisely, any organization goes wherever its people recognize that the Core Group requirements and wants to let it go. Non-members depend on the Core Group for direction. The Core Group and its members rely on the non-members for their legality.
Core Groups are usually not revealed in any organization chart. They live only in people's minds and hearts. After some time, organizations will look like their Core Group and also act like it. And automatically pivot and twist to provide the members of the Core Group what they think they desire and need, without even asking them. Great Core Groups owns an important form of knowledge. They set the context that establishes this knowledge as important.
Expanded Core Group Organizations
Kleiner proposes that is it is likely to create "Expanded-Core-Group Organizations". To do this, the following elements are recommended:
• Financial literacy.
• Employee securities (stock) ownership plans.
• Comprehensive (financial and strategy) training programs.
• Non-hierarchical decision-making.
This is where Core Group theory is not different from Value Based Management thinking.