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Prahalad and Hamel articulated the resource-based perspective of how a firm could pursue its long-term by incrementally improving its capabilities.

They used examples such as Canon (core competence in optics) and Sony (in miniaturisation and packaging) which used them to expand into adjacent markets - such as laser printers and video recorders respectively.

A core competency is a specific factor that a business sees as being central to the way it, or its employees, works. It fulfills three key criteria:

A core competency can take various forms, including technical/subject matter know-how, a reliable process and/or close relationships with customers and suppliers. It may also include product development or culture, such as employee dedication.Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value. Core competencies are the collective learning in organizations, and involve how to coordinate diverse production skills and integrate multiple streams of technologies. It is communication, an involvement and a deep commitment to working across organizational boundaries. Few companies are likely to build world leadership in more than five or six fundamental competencies.

Bottom Of the Pyramid

But Prahalad was not content, and his next idea was even more compelling. And timely, just as poor nations were metamorphosing from 'less developed countries' to 'emerging'. Prahalad's insight was into the nature of poor societies. The idea he popularised is known as the Bottom of the Pyramid.

He was also known widely for his interest in the "Fortune at the Bottom of the Pyramid" -- and his book on the subject is considered an authoritative exposition of the potential for large corporations to improve the conditions of the poor in countries such as India. They could do so, he argued by "mobilising investment capacity [along with] the commitment of NGOs and the communities that need help." The poor must become active, informed and involved consumers, he urged.

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* Contributed by: -
Prof. M. Guruprasad is Senior Faculty for Economics, Finance and Research, with AICAR Business School Raigad / Mumbai. He has more than 15 years of experience in research and educating / training management students. He was research scholar with the University of Mumbai. Worked as Executive in the Marketing research industry. Also Conducted Workshops and Training programmes. He has published articles in various industry magazines, newspapers and has initiated many discussions on academics.