CORE COMPETENCE

Competence refers to fitness to undertake, efficiency to withstand, capacity to

excel and sufficiency to live in comfort (without being threatened). The word core means
the innermost or the most essential of anything. Therefore, core competence means, the
essence, the substance, the nucleus, the focal, the marrow, the heart or the hub of
competence. In other words, core – competence with power and the like is the ultimate in
competency.
In a very practical sense, core competence refers to, according to one of the
proponents of the theory of core competence, Prof. C.K. Prahalad of University of
Michigan, “a bundle of skills that are not widely available in an industry”. Knowledge
and skill are of two types – the core and the peripheral. Knowledge and skill are simply
the foam – hollow and contentless. Core knowledge and skill are not widely available in
market. Accumulated core knowledge and skill lie at the core of core competence. Core
competence provides what is known as the competitive edge over others. Japanese
business masters would say that if one did not come within the top three positions in any
industry, one need not be there at all. Conversely, if only one is counted within the top
slots, one can be considered as having core competence.
Core competence, Prof. Prahalad views, does not mean restricting the number of
business. When diversification is based on opportunities, it adds to core competence. In
diversification lies growth. In each area core competence can be sourced and established.
This is corroborated by research as well. Management needs 3 types of skills – the
conceptual, administrative and technical. Core competence is more of the ‘technical’ type
which can be obtained by proper sourcing of talents and resources. Strategic alliances can
be depended on for this sourcing. They urge that the case of India is different from the
USA or Japan. In the USA, ‘bigness’, or ‘global size is always the most sought thing.
In the case of Japan, which form early time vied for global market, ‘bigness’ is the
most essential. For India, the home market is the first attraction. And with the kind of
linguistic and other social fragmentation, business also concentrate on niche markets.
Diversification route was adopted in this context.
“Core competence” is purely a free market concept. It is more relevant at global –
level or at least has nation – level presence. It is something that one builds over time by
experience, perseverance and dedication.
All these are impossible to achieve without core competence built over years of
committed, concentrated concern. Core competence means superior knowledge and skill.
It is not of the ‘me too’ type performance. In it are the dynamics of perfection, the passion
for excellence and cutting edge competitive competence.
Ours is a knowledge society. No one can be at the frontiers of knowledge in all
fields. So, a business group should not vy for everything that the market throws up, but
choose consciously few areas in which it can measure up to International standards.
 If Indian businesses diversify without focus and the vision of core competence,
they will be overthrown by the international giants sooner than later. Strategic alliances
would not help any longer for, in the days to come to strike such alliances one must
posses core competence.