Definition = underlying skills, technologies, and competencies that can be combined in different ways to create the next generation of products and services

3 tests suggested by Prahalad and Hamel (1990)

1. difficult for competitors to copy

2. potential access to a wide variety of markets

3. significant contribution to customer satisfaction and benefit

+ extra test (if now competence is not a core competence)combined with other competencies -> essential uniquenesswhat would happen if we did not have the competence?

Prahalad and Hamel: identify, cultivate and exploit core competencies!

Future - drives major corporate changes- emerge of a network of strategic alliances - each partner brings core competencies- demeger and sale of non-core activities and brands- organizational changes away from SBUs to a new strategic architecture

Further tips:- activities are not competencies eg quality products or marketing strength are attributes, not competencies hondas core competence are small engines- avoid laundry lists - just a hand full competencies!- achieve management consensus- leverage core competencies- share core competencies with other organizations - collaboration