Fachhochschule Nürtingen
Business Management
‘Oberseminar’ within the field of
Organization / Project Management:
7th semester

Integral View of Core Competences and
Core Processes in a Company

von: Cindy Zacker

Abstract 1

1 Introduction 2

2 The core of a competence 3

2.1 Identification of strategic success factors 3
2.2 Business competence 4
2.3 The concept of core competencies 4

3 The core of a business process 7

3.1 Business process 7
3.2 Core business process 8
3.3 The concepts behind the core process 8

4 Translating the idea of core competencies into core processes 11

4.1 From strategy to operation 11
4.2 Organizational configuration to support core competence and core process 12
4.3 Managerial functions 16

5 Conclusion 19

Appendix V

References X

Word of honor XII

Abstract

This paper deals with the concepts of core competencies and core processes within the scope of business sciences. It will first give an overview of the classification of the concepts and will then move on explaining how these ideas are implemented within the company. The importance of professional skills is identified and examples will provide a more practical insight into the issue.

1 Introduction

Successful companies rely on three types of competencies: superior technological know-how, reliable processes, and close external relationships. Therefore different approaches to develop each type of competence are needed. (Baveja, 1998). The ideas regarding core competencies had probably been the first nameable progress within the field of strategic thinking since Michael Porter directed business management’s attention from market share to the chain of economic added value and business processes. Hamel and Prahalad (1990) then proposed to develop and add more fluency as well as flexibility to the strategy. The ambition of identifying and applying core competencies and core processes of a company increased particularly during the 90s when Outsourcing became widespread practice. Companies were able to outsource almost every process – therefore it was important to know the central activity that only the company itself was able to fulfil. As these where sometimes only few, companies had the possibility to completely evolve into a virtual organization. (Ephorie, 2004, online). Companies’ competencies are seen as the engine for new business development. They may guide patterns of diversification and market entry. It is vital a company harmonizes the individual technologies and production skills that comprise a core competence. As this is a very complex issue it is in need of a comprehensive pattern of internal coordination and learning. The management should determine - in a cross-functional sense - what the company’s major activities are through which it provides value-products and services to customers, value being the primary definer of a core activity.

2 The core of a competence

2.1 Identification of strategic success factors

Within the area of Strategic Management plenty of views can be found to research companies’ requirements in a fast changing environment. In order to analyze and identify strategic and critical success factors, two of them can be named: the Market-based view that goes back to Mason and Bain and the Resource-based view after Penrose. (Bea/Haas, 2001). Whereas the Market-based view regards the company from the Outside-in-perspective and attributes the company’s success in dependence with its attraction in its industrial sector (Porter, 1998), the Resource-based view puts the Inside-out perspective to the fore and also deals with the so-called New Economy. According to the Resource-based view competitive advantages, say conditions that enable the company to operate in a more efficient way than its competitors and thus result in accruing benefits (Investorwords, 2004, online), are not only to be found externally but also within internal resources of a company, such as human capital. The steady success of a firm, corresponding to this view, depends on the quality of the company’s resources. Bea and Haas (2001) define these resources as strategic potentials which demonstrate storage of specific strengths that enable the company to position herself in a changing environment and thus secure long-term success. They distinguish between two varieties of the Resource-based view: the Knowledge-based view and the Concept of Core Competencies. The center stage of the latter takes not only one single resource but the aggregation of several resources to specific skills or core competencies.

2.2 Business competence

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