VOL 40, NO. 4

SUMMER 1998

Dynamics of Core Competencies in Leading Murtinational Companies

reduced the ratio of SGA as a percentage of sales of the acquired companies, typically around 8% -10%, to its own benchmark of 5%. Currently, Crown Cork and Seal is developing closer external

relationships with customers and suppliers: The numerous acquisitions expanded the firm’s national and international reach and broadened the firm’s product scope to include plastic and metal

packaging, as well as the package-filling machinery and the imprinting color lithography on packages. With this broadened scope. Crown Cork and Seal seeks to develop closer relationships with

larger customers by providing a one-stop shopping service for all their international packaging needs. It also plans to offer its larger customers a joint research and development service. At the

same time, the firm now plans to exploit its larger size with suppliers: it will pool the purchasing needs of its acquisitions to obtain purchasing economies by developing closer relationships with

fewer suppliers. Conclusion The study of these leading companies has several implications for strategists. Leading companies do not stand still and rest on their traditional competencies.

Instead they develop new competencies that respond to or anticipate emerging business conditions. A shift is occurring in relative emphasis from internal technological and reliable process

competencies toward external relationship competencies. Having multiple competencies can make it that much more difficult for competitors to imitate. It also increases the adaptability of the

firm and should promote long-term survivaL Notes
1. C.K. Prahalad and G. Hamel, “The Core Competence of the Corporation,” Harvard Business Review, (May/Junel990) 79-91. 2. J. Quinn and F.G. Hilmer, “Strategic Outsourcing,” Sloan Management

Review, (Summer 1994) 3. B. Wernerfelt, “A Resource-Based View of the Firm,” Strategic Management Journal, 5/2 (1984): 171-180; L. Dierckx and K. Cool, “Asset Stock Accumulation and

Sustainability of Competitive Advantage,” Management Science, 35 (December 1989): 1504-1511; D.J. CoUis and C. Montgomery, “Competing on Resources,” Harvard Business Review, (July/August

1995): 118-128. 4. Prahalad and Hamel, op. cit.; J.B. Barney and M.H. Hansen, “Trustworthiness as a Source of Competitive Advantage,” Strategic Management Journal, special issue on Competitive

Organizational Behavior, 15 (Winter 1994): 5-9; D. Levinthal and J. Myatt, “Co-Evolution of Capabilities and Industry: The Evolution of the Mutual Fund Processing,” Strategic Management Journal,

special issue on Competitive Organizational Behavior, 15 (Winter 1994): 45-62; H. Rao, “The Social Construction of Reputation: Certification Contests, Legitimation, and the Survival of

Organizations in the American Automobile Industry, 1895-1912,” Strategic Management Journal, special issue on Competitive Organizational Behavior, 15 (Winter 1994): 29-44; R. Henderson and 1.

Cockburn, “Measuring Competence? Exploring Firm

CALIFORNIA MANAGEMENT REVIEW

VOL40,NO.4

.
.