Introduction

The core competence concept was introduced by Prahalad and Hamel in 1990, and the concept received much attention particularly in the management field. They were arguing that in short run, a company’s competitiveness derives from the price/performance attributes of current products. On the other hand, in the long run the competitiveness derives from an ability to build the core competencies that spawn unanticipated products. The real source of corporate advantage is the abilities to consolidate corporate technologies and products in order to adapt quickly to changing business opportunities (Prahalad & Hamel, 1990).

Core competencies are seen as collective learning in the organization, not individually based learning or skill (Gallon, Stillman & Coates, 1995). Core competence is the way of work is performed, the ability to coordinate diverse production skills, to integrate and harmonize multitude of skills and technologies into products that deliver value to customers. Core competencies are the glue that binds existing business and also the engine for new business development (Prahalad & Hamel, 1990). Core competence is a combination of complementary skills and knowledge bases embedded in a group or team providing a superior product (Coyne, Hall & Clifford, 1997). Core competence has to be linked with end products. In between core competencies and end products we can identify a set of core products that can be used in a number of different combinations and finally different end products.  Therefore there are numerous relations between core competencies, core products and end products.

Global competition and the dynamic changes of markets and customers puts pressure on corporations to identify their core competencies in order to develop capabilities to adopt to changing environment and technological development. The crucial issue for management is to perform analysis of what the core competence is in their corporation and how those core competencies can be related to core products and end products. If management does not find those answers they can not put focus in developing long run competencies and technologies that can be combined in a set of core products and strategic end products.