Academic journal article Advances in Management

Core Competencies for Business Excellence

Academic journal article Advances in Management

Core Competencies for Business Excellence

Article excerpt

Abstract

This paper reports a part of the research conducted in sample of selected listed Indian companies under doctoral research work on "Factors determining excellence in Business-A study of selected listed companies in India".

Concept of Core competencies since its first proposition by Prof Gary Hamel in 1990 has been subject of intense study and interest for firms to deliver sustainable competitive advantage. However, there has been low response about the core competencies in our sample companies here in India. The concept of core competency may well become a trap of false security unless understood in right context. The core competencies have to be viewed in context of fixture competition and to be well integrated with product-market strategy. The paper concludes that right bundle of core competencies do act as factor for business excellence.

Keywords: Core competency, factors of excellence, competitive advantage, business excellence.

Introduction

In our Doctoral research project on 'Factors Determining Excellence in Business', when the question about core competency was asked to 75 top performing listed companies in India which are virtually 'who is who' of Indian industry and many of them occupying high ranks in Forbes list, Global innovators list and having won excellence model awards, only 6 companies have replied to the question. This is very low percentage. It appears that core competency is not considered significant for companies working in current complex environment or they have not seriously worked on this aspect.

We will first have an overview of what Indian companies said:

Mahindra Holidays-Land acquisition, Low cost holidays

Everon - Technology in Education and Training material

Exide-Battery Technology

Crompton Greaves-Transformers

Orient Fans- Pollution Control equipment

Carborundum Universal- Abrasives technology and range.

But are these core competencies, really?

The result was surprising and hence, enquiry began as to meaning and relevance of core competencies and the advantage it might give to companies.

The Indian companies seem to be working far away from the hedgehog concept advanced by Jim Collins1 in his pioneering study for the book "From Good to Great".

Four basic questions arise:

1. Is core competency a permanent feature of any company that may have it?

2. Do customers value core competency?

3. Is core competency relevant to certain areas like High technology based products?

4. In modem environment of globalised business and access to technology by all firms, does core competency offer any differentiation advantage in market?

Question of relevance arises due to current environment of Innovation, Cloud computing, Outsourcing and Multiple joint ventures. But even to manage such Joint ventures and collaborative products one needs special skill and network which can be termed as core competence. We propose to define core competency in a simple format first and then critically examine this in view of literature and practices followed by companies.

'Core competency is a unique capability acquired by a firm over a period of time in form of a resource, operations facility, specially skilled manpower, knowhow or delivery of service which gives the firm sustainable competitive advantage in fixture in quality, design, production or distribution of a product/service or in cost of the product and is viewed as a relative value addition by a prospective customer.'

A firm can have multiple competencies.

Review of Literature

Relevance of core competency: Core Competencies are bundles of skills and technologies that are very difficult or impossible to match. The concept was made very popular in the mid nineties by Prof. C.K. Prahalad and Prof. Gary Hamel10 through their excellent book "Competing for the future". Twenty years down the line, there are some doubts as to whether they are still relevant. …

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