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CS Professional · Strategic Management and Corporate Finance · Competitive Positioning

Prahlad and Hamel describe a core competence as a bundle of skills and technologies that qualifies for which of the following tests?

A core competence must open access to many markets, add significantly to the benefits customers perceive, and be hard for rivals to copy. It is a collective skill-and-technology bundle, not merely the top revenue earner or an outsourced function, and it should be redeployable across products.

  1. AIt is tied to one product and cannot be redeployed
  2. BIt gives access to a wide variety of markets, contributes significantly to perceived customer benefit, and is difficult for competitors to imitateCorrect
  3. CIt is the activity that generates the highest revenue in the current year
  4. DIt is any function that the firm outsources to a specialist

Explanation

The classic tests are: provides potential access to a wide variety of markets, makes a significant contribution to customer-perceived benefits, and is hard for competitors to imitate. Highest revenue and outsourced activities are not tests, and a competence tied to one product fails the access-to-markets test.

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