This article was published by Business Standard's The Strategist supplement in 1999, and tries to argue that the core competence theory advanced by C.K. Prahalad and Gary Hamel was more subtle and complex than it was made out to be in the Indian business circles. Indian companies had diversified into several new industries that were opened up after the government launched economic reforms in 1991, and by the mid 1990s there was an aprehension that such diversification was undesirable because it ran counter to the core competence theory. This article tries to argue that the core competence theory was not opposed to diversification, that in some cases diversification was necessary to take advantage of core competences, and that to some extent the core competence theory was not relevant in the Indian scenario given the market imperfections.
Org need to take systematic approaches to core competences development - the need to create, develop, maintain core comp. must be built into the design of management systems. Ig org are to thrive, they must not only exploit their existing core comp, but also must invest in continually exploring new core comp. as strategic options for future strategic advantage. In other words core comp. cannot remain static.
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