Hi all, sorry for the long absence I have recently started a masters in corporate strategy and I have been neglecting my blogging, finding Dr. Who didn't help either. I hope to start posting more regularly again and with the added insight gained from this masters.
Today I want to talk about the concept of core competences and how a company can utilise them to retain market share.
Samsung is a company that has been immensely successful in the last decade, I believe the reason for this is their ability to develop core competences.
Many companies become successful on the back of one or two majorly successful innovations and then find themselves unable to develop new products so they focus on incremental improvements or redesigns of old products.
As other firms imitate the original product the first to market firm loses its source of competitive advantage and must now find a new way to compete, often price which leads to outsourcing of tasks and an erosion of competences.
Samsung have perfectly avoided this by developing core competences in both screen and mobile processor technology, they did this through information sharing between business units and a focus on value adding components.
Samsung now produce some of the highest quality products in both of these fields and companies cannot imitate them. A result of this can be seen in the new iPhone 5s which uses a Samsung processor. Apple can no longer compete in this field and have lost any expertise they may have had due purchasing from a competitor. These are the activities that make Samsung successful.
A key theory and the grounding my thoughts on Samsung is an article called The Core Competence of the Corporation by Daniel Prahalad. I really recommend reading it.
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