Critical review from an Business Strategy Article - Essay Example

Critical review from a Business Strategy Article The core competencies strategy, amongst all the other strategies that the management of different organizations may apply, emerges as superior, according to Hamel & Prahalad (1990 p80). The core competencies strategy makes the exploitation of opportunities more viable, and thus sets an organization on the path of growth, in terms of size, sales and revenues, through focusing on the roots of business competitiveness and then capitalizing on them to spur future growth, expansion and attracting more business (Prahalad & Hamel, 81). A core competence strategy applies in three different fronts, namely exploration of a wide variety of markets, focusing on the customers’ needs and seeking to meet the expectation of the customers through making a beneficial contribution, and making it difficult for competitors to imitate the business and core product path charted by the organization (Prahalad & Hamel, 85). While restructuring and delayer of an organizational structure is regarded a way out in dealing with administration and expansion difficulties for an organization, such structural adjustment strategies cannot meet the concept of internal surgery of an organization, which needs rethinking, on the event that the sustainability of the organizations competitiveness in the global market is to be achieved (Leonard-Barton, 1992 p112). Nevertheless, while specializing in core competencies is the business strategy to reckon with, it requires that an organization focuses substantial resources in learning and absorbing the necessary skills that are perceived as necessary for the identified potential business growth area (Prahalad & Hamel, 87). Such requirements may necessitate an organization to go an extra mile to partner with other organizations that have perceived dominant skills in the identified potential business area, or even merging or acquiring such organizations. The essence of any business survival and consistent competitiveness is the ability to focus on an area that is likely to develop more business opportunities in the future, and then seeking to gather all the required skills and competencies, towards ensuring that the business will be able to take the opportunities without any challenges (Leonard-Barton, 1992 p117). Therefore, the concept of core competencies as an application strategy for businesses, require advanced focus and learning the trends and change within an industry, and then identifying one or a few areas of the changing trends that are likely to merge, then working towards producing a product that serves that exact merging point of need (Prahalad & Hamel, 80). Informed by the principle of competitiveness, the strategy of core competencies works on the basis of building a portfolio of competencies, at the expense of a portfolio of businesses, meaning that attaining competiveness for a business organization is no longer about building a chain of related business within an industry, through diversification, but analyzing the specific areas a business can have a competitive advantage, and then capitalizing on that area to build on the competitiveness (Prahalad & Hamel, 81). Nevertheless, while applying the strategy of core competencies, it is paramount that focusing on new areas of business where others have not yet perceived opportunities should not relent, so that an organization can build a stable competitive platform, which makes it difficult for others in the same industry to compete. The main strengths of the article is that it demonstrates the major arguments through the application of real organizational examples, detailing the process of such organizational businesses, and showing how the core competencies strategy made an overall difference. This way, it becomes easy to understand the strategy advocated, since real life examples are applied. A better demonstration is when the information technology industry was evolving in the early 1980s, where GTE was the company poised to take the advantage of the opportunity and see significant growth in its size, sales and revenues, considering that it was already well established in the industry, as opposed to NEC, which was a relatively small company in the industry (Hamel & Prahalad, 1990 p79). In that year, with massive experience in the technology and communications industry, GTE had diversified its business to a range of sub-sectors in the communication and technology industries, thus allowing its sales revenue to boom up to $9.98 billion, compared to the $3.8 billion made by NEC in the same year, considering its relative small size and lack of adequate skills in the industry (Hamel & Prahalad, 1990 p79). Thus, by 1998, NEC, a previously small and inexperienced company in the industry had managed to beat the giant GTE in sales and revenues, with NEC’s revenue in the year standing at $21.89 billion, while GTE’s revenue was way below, standing at $16.46 billion (Hamel & Prahalad, 1990 p79). This change was not accounted for by any other factor, other than the specialization of NEC in a few areas of the information communication industry, by articulating its business strategy towards meeting the converge of computing and communication, a strategy it dubbed C&C (Hamel & Prahalad, 1990 p80). Therefore, it is through specialization in the area that NEC managed to overcome the challenges of lack of experience and small size, to beat the giants who had dominated the same industry previously. The other strength associated with the article is that; it gives consistent and elaborate discussions, through applying some subheadings on every new issue being discussed. This makes it easy for the reader to understand the different concepts discussed, as opposed to an article written in prose form, which would make it difficult to differentiate the concepts. However, the main weakness associated with the article is that it has concentrated virtually on the discussion and exemplification of businesses within a single industry; the information technology, while ignoring the rest. The challenge associated with such a discussion is that it becomes difficult to understand whether the strategy is universally applicable to all business fields, and to different organizational forms. Secondly, the article advocates for practices that may eventually end-up resulting to the loss of an organization identity, such as merger and acquisition. Finally, there is hardly no quoting or referencing of other works in this article, thus making it virtually a one sided analysis, considering that it does not display the point of view of other writers nor any criticisms to the assertions made regarding the strategy of core competencies. References Leonard-Barton, D. (1992). Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal 13, 111–125. Prahalad C.K. & Hamel, G. (June, 1990).The Core Competence of the Corporation. Harvard Business Review 68(3), 79-91. Read More