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CS Professional · Strategic Management and Corporate Finance · Managing the Multi-Business Firm and Analyzing Strategic Edge

According to the core competence concept popularised by Prahalad and Hamel, which of the following best qualifies as a core competence of a firm?

A core competence is a collective learning capability that opens access to many markets, adds clear value to customers and is hard for competitors to imitate. A single product, cash reserve or factory location lacks these features and can be copied or purchased.

  1. AA collective learning capability that gives access to many markets, adds noticeable value to the customer and is hard for rivals to imitateCorrect
  2. BA single successful product that currently earns the highest revenue for the firm
  3. CA large cash reserve that the firm keeps for acquisitions
  4. DA low-cost factory located near a port

Explanation

Core competence is the bundle of skills and technologies, built through collective learning, that opens access to a variety of markets, contributes significantly to perceived customer benefit and is difficult for competitors to copy. A product, cash reserve or location can be matched or bought by rivals and so does not meet these tests.

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