Core Competency and the Supply Chain

The second driver for partnerships, and a deeper strategic one, is the focus on core competence. Assumptions about core competence underlie many decisions about partnerships. A decision to perform or not perform an activity or produce or not produce some component is a strategic determination. It entails deciding which capabilities to retain and cultivate. It also affects the 

Competencies the roots of competitiveness. (Reprinted by permission of Harvard Business Review, Exhibit from The Core Competency of the Corporation by Gary Hamel and C. K. Prahalad, May-June, 1990. Copyright 1990 by the President and Fellows of Harvard College aU rights reserved.) 

Cine or more competencies support a core product. These core products are the heart of many products that go to market. The core products feed the end product offerings of various businesses. So Honda s core products, engines, and power trains produce multiple motorized products. The strategic business unit, or SBU, markets and sells end products that have their roots as core products based on core competencies. 

The authors illustrate the point with Canon, a manufacturer of a range of high-technology products. Canon has three core competencies in precision mechanics, fine optics, and microelectronics. They apply combinahons of these to a score of products ranging from cameras to copiers. Note that the tree diagram is not an organization chart. Core competence may be nurtured by many mechanisms like teams from departments across the organizahon. 

It also doesn t, for example, necessarily imply the need for a corporate director for each particular competence. 

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