End Products

1. TV’s Cameras Gaming Smartphones Laptops End Products

2. CORECOMPETENTCIES Group 6 Shelly Nelson Joshua Carr Joseph Garza

3. DEFINITION OF CORE COMPETENTCY • The collective learning in the organization • ..especially how to coordinate diverse production skills and integrate multiples streams of technologies (pg. 82) • Concept in Management Theory • originally advocated by C.K. Prahalad, and Gary Hamel, 1990 The “Glue” that Binds the Existing Businesses

4. Root System = Core Competency provides nourishment, sustenance and stability Think of a diversified corporation as a large tree …………. Leaves, Flowers and Fruit = End Products Trunk and Major Limbs = Core Products

5. Miniaturization Microprocessors Core Competency Core Product Laptops Smartphones Gaming Cameras TV’s End Products

6. QUALITIES OF CORE COMPETENTCY What it Is: What it is Not: Outspending on R&D Shared costs between Strategic Business Units (SBUs)(vertical integration) • No more than 5 or 6 qualities • Harmonizing technology, and expertise • Communication and involvement with a deep commitment to working across organizational boundaries

7. IDENTIFYING CORE COMPETENTCIES(3 Tests) • Provides potential access to a wide variety of markets • Example: Competence in displays  Access to markets in: • Calculators, TV sets, electronic monitors, automobile dashboards • Makes a significant contribution to the perceived customer benefits of the end product • Difficult for competitors to imitate Competence Adhesives

8. BENEFITS OF CORE COMPETENTCY A critical task for management is to “create an organization capable of infusing products with irresistible functionality” or better yet, “create products that customer need but have not even imagined.” • Basis for global leadership • Source of competitive advantage • Consolidate corporate wide technologies and production skills • Foundation to respond quickly to emerging markets • Ability to invent new markets and deliver customer value

9. CASE STUDY COMPARISON

10. FROM CORE COMPETENTCYTO CORE PRODUCT Core Competency Collective Learning Management Theory Concept Allows access to wide market Communication and involvement Core Product Products closely related to core competencies Integrated into end products Major products manufactured by the company

12. Core Products: Engines & Powertrains

13. MANUFACTURING SHAREVS.BRAND SHARE • World Manufacturing Share • Percentage of total world production of a specific core product • Brand Share • Percentage of total world production, of a specific core product, sold within a single brand

14. FROM CORE COMPETENTCETO STRATEGIC BUSINESS UNIT (SBU) Perform Customer Needs Assessment Determine Overhead & Cost Structure Define Opportunity Strategic Business Unit Define Gross Profit & Net Profit Define Market’s Size

15. TWO CONCEPTSOFTHE CORPORATION: SBU OR CORE COMPTETENCE

16. TYRANNY OF SBU’SStrategic Business Unit • Underinvestment in Core Competencies and Products • Lack of responsibility • Lack of vision • Imprisoned Resources • SBU Competencies not shared • Bounded Innovation • Opportunities not pursued

17. LOSS OF CORE COMPETENTCY • Cut internal investment of core products • Outsourcing • Chrysler engines • Exiting business and forfeiting core competency that could provide new opportunities • Examples: • GE color TV market

18. “A roadmap of the future” that usually long term Varies depending on the company Questions must be answered: How long could we preserve our competitiveness in the business if we did not control this core competence? How central is this core competence to perceived customer benefits? What opportunities would be foreclosed if we were to lose this particular competence? Transparency of resource allocation to the entire organization. Creation of managerial culture Teamwork Adaptability Sharing of resources Protection of Proprietary Skills Long Term Customer Focus The tool for communication between a company’s customers Reveals direction and opportunities DEVELOPING STRATEGIC ARCHETECTURE

19. VICKERS MAP OF COMPETENTCIES Electronic Controls Valve Amplifiers Logic Motion Complete Machine and vehicle Fluid Power Electro hydraulic Pumps Control Valves Cartridge Vales Actuators, Ect. Electronic Power AC/DC Servo Stepper Sensors Valve/Pump Actuator Machine System Engineering Application Focus Power/Motion Control Electronics Software Electronic Products Actuators Fan packages Generators Offering Systems Packages Components Service Training Focus Markets Factory Automation Off-highway Missiles/Space Automotive Systems Commercial Aircraft Defense Vehicles Plastic Process Military Aircraft Marine

20. Identify competencies and the projects and people connected with them. Recognize that core competencies are corporate recourses and may be reallocated as needed. Divisional managers come together and decide the needed investment to build each competency. Cooperative SBU managers must be recognized for their team work. Expose people by using a rotation program. End goal: Strong feeling of community and customer focus. REDEPLOYING CORE COMPETENTCIES

21. CRITIQUE OF IDEAS Related to Core Competency Core Competencies Establish Intellectual Capital for Long Term Business Success

22. Graduate of Harvard School of Business Professor at Univ. of Michigan School of Business Advocate of Core Competency Focus for Businesses Business Consultant Graduate of University of Michigan School of Business Visiting Professor of London Business School Ranked as the “World’s most influential business thinker” by the Wall Street Journal Business Consultant and Media Contributor AUTHORS BACKGROUNDS Coimbatore K. Prahalad 1941-2010 Gary Hamel 1954 - Present

23. QUESTIONS • What is a core competence of a corporation? • Why core competencies do not diminish in an organization? • What do the authors mean by “the tyranny of the SBU?” • In what ways the two concepts of the corporation, SBU and core competence differ? Explain • What would be your individual core competence? • How would you relate that to your future development in personal goals in life?