The Electronic Device Industry Commerce Essay


Electronic device industry was one of the fastest changes industries due to rapid enhancement of technologies and the shorter life span of the product (Ernst, 2009). The sustainability in the industry had become one of the important research studies neither in the academics nor in the contemporary management. Some scholars noticed that core competences (Hamel & Prahalad, 1990) of a company were the key of survival and achieve competitive advantage the industry. 'Competitive advantage is more likely to be created and sustained if the organization has distinctive or unique capabilities that competitors cannot imitate' (Johnson, Scholes & Whittington, 2005). Apple Inc. was one of the successes company in the industry, and the key of success due to core competence which will be discuss later.

Company Background

Apple Inc was first founded by Steve Jobs and Steve Wozniak in Palo Alto, 1976 while on that time simple computer which consists of little more than a circuit board being invented (The Economics Times, 2012). Now days, Apple Inc. not only involve in the computer production but engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. It also sells a range of related software, services, peripherals, networking solutions, and third-party digital content and applications (Reuters, 2012).

Core Competences

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The first idea of core competence was introduced into management literature in 1990 by C.K. Prahalad and Gary Hamel (Hindle, 2008) and define as 'the activities and processes through which resources are deployed in such a way as to achieve competitive advantage in ways that others cannot imitate or obtain'. Implementation of core competence enhance firm's diverse production and technology skills under the creation of unique, integrated system that reinforce fit in the firm (Hamel & Prahalad, 1990). Firm implementation benefits access to resources and markets also determine the settings on how the company's interactions and operations occur (Roulac, 2001). As time goes by, management strategy were found more and more important especially in the topic of core competence and because of that, existent of different version of core competence framework by different researchers and academic authors, this essay were just stick to Prahalad & Hamel's (1994) framework due to they are the pioneers and gurus in the learning business school and also the first advocates of this core competences concept. Hamel & Prahalad (1994) gives a core competence framework of three factors determination, customer value, competitor differentiation and extendibility.

Customer Value

Customer value found as one of the key factor of core competences and disproportionate attentions to customer-perceived value are important for firm's competitive advantage. 'Core competencies are the skills that enable firm to deliver a fundamental customer benefits' (Prahalad & Hamel, 1994). There is no doubt that technology keep on evolving, and the product must also keep on upgrade in order to suites the market latest trend. For a well-managed market leader not just only have to develop new products but also important listening close to its customers taste and wants (Christensen, 1997). Core competence advocates the birth of innovation as it is a 'major concept in managing innovations and technologies' (Mattes, 2012). Christensen's thesis (1997) pointed out that firms innovation divided into two categories: "sustaining technologies" and "disruptive technologies". Innovations in sustaining technologies improve the performance of established product (or services) in way that mainstream customers have historically valued (Christensen, 1997). However, disruptive innovations involve new products (or services) that have no clear-cut customers base; they "underperform established products in mainstream markets, but may have others features that a few (and generally new) customers may value." (Christensen, 1997). Continuous sustaining technology helps to invent good products that can avoid direct competition and adequate marketing efforts able to secure growth of sales (Prymon, 2011). A 'sustaining technology' innovation are the strategy of winning and case study of Apple Inc below shows the continuous perseverance 'sustaining technologies' strategy that make it so successful in now days.


'The touch-screen interface of the iPod and the iPhone enables easy use of the device without the need for physical buttons. The usability of the services, on the other hand, is enabled by the service-user interface function i.e. iTunes. systemic value in Apple's offering. One could imagine that improving the design function of the iPod Nano might improve the usability of this particular model but not the usability of other products such as the iPhone. However, when the common user interface of the devices is improved, it makes all the devices easier to use. The biggest impact on the total value of the offering is realized when the service user interface function, in this case iTunes, is improved in that it benefits all the devices and their usability. The implication is that improving a systemic service function will increase the total value of the offering more than the original improvement because of its numerous connections'(Pynnönen, Ritala & Hallikas, 2011).

Competitor Differentiation

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'To qualify as core competence, a capability must be competitively unique' (Prahalad & Hamel, 1994). From the quotation above, Prahalad and Hamel (1994) told that a company must unique and different from it rival in order to achieve competitive advantage in the industry. The uniqueness not just only in product differentiation but the differentiation of idea from it's competitors. Strategy as metaphor is one of the vital strategy that marks the sign of differences of a firm and its competitors. Metaphor define by Webster's online dictionary (2004 as cited in Foster-Pedley et al., 2005) 'Many consider metaphor to be at the heart of poetry (or even to define in pan what it means to be human): the figure of speech that links dissimilar objects or concepts, establishing a non deductive relationship. It is a way of expressing an idea, through an implicit paradox, that cannot be conveyed literally. In this sense, it is not only at the heart of poetry, hut of science as well: ideas that are fundamentally original and new, can only be conveyed in this manner. Computers, and animals, do not and cannot use metaphor to communicate'.' By using this strategy, company's background can easily accept by the stakeholder as it 'makes stakeholders understands organizational dynamics is better achieved by understanding the shadow system of organizations' (Foster-Pedley et al., 2005). Apple not just success in terms of product differentiation from its competitors as discussed above, it is also successful in implementing marketing strategy campaigns, such as the series of "Think Different" advertisements. Symbolically, the "Think Different" marketing campaign give Apple Inca to distinguish from its competitors by making it cool to be different (Wooten, 2010). Furthermore in 2009 annual report stated that Apple mission as 'bringing the best personal computing, mobile communication, and portable digital music and video experience to consumers, students, educators, businesses, and government agencies through its innovative hardware, software, peripherals, services, and Internet offerings.'(Apple Inc, 2009). Now days, logos of the Apple Inc had completed its transforms from a well known technology company into a lifestyle brand (Chatfield, 2012).


Hamel & Prahalad (1994) stated 'a particular competence may be core in the eyes of single business, in that it meets the test of customer value and competitive uniqueness, it may not be a core competence from the point of view of the corporation if there is no way of imagining an array of new products or service issuing from the competence.' Diversification was one of key winning strategy for a company to success and companies benefited by doing diversification to upgrade for obsolescent technology, risk distribution, fully utilize excess productive capacity, to reinvest earnings, to obtain top management, and so forth (Ansoff, 1957). A successful company does have a concentric diversification characteristic such existence of a strong core business, diversification into adjacencies that are close to the core business and leveraging of skills from the core business (Rijamampianina, Abratt & February, 2003). '"The greatest product extension success story of modern times has to be Apple," says Toronto-based author and branding consulting, Bruce Philp. '(as cited Deveau, 2012). 'From Mac to iPod, from Apple TV to iPhone to iPad, we keep raising the bar for products that delight and amaze our customers.' (Apple, 2012).

Tacit Knowledge

Although knowledge does not covered in Hamel and Prahalad (1994) core competencies framework but this element were the blood that keeps the core competence above to keep on moving, because of that tacit knowledge influence company's innovation and learning were specifically discuss in this paragraph. Prahalad and Hamel (1990) stated 'if core competence is about harmonizing streams of technology, it is also about the organization of work and delivery value.' Although knowledge and competence found as critical resources of firms and economies (Drucker, 1993) but in the recent study had focused more on the importance of tacit knowledge for sustaining firms' competitiveness, and its role in technological innovation and organisational learning(Lam, 1998). Tacit knowledge refers to 'knowledge that cannot be easily articulated or transferred because it is uncodified and context specific' (Lam, 1998) and it can help to creates the learning path for others to follow and provides competitive advantage for future successful companies (Kikoski and Kikoski, 2004). The implementation for the strategy help the firm build the competitive advantage because 'tacit knowledge is critical to the key organizational tasks of creating new knowledge, generating new products and improving new business procedures leading to innovation' (Alwis & Hartmann, 2008) as 'knowledge created through this spiral process can trigger a new spiral of knowledge creation, expanding horizontally and vertically across organizations'(Alwis & Hartmann, 2008). Apple is a success story to transfer the tacit knowledge to its employees for innovation enhancing.

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'In order to institutionalize the lessons that he and his team were learning, Jobs started an in-house center called Apple University. He hired Joel Podolny, who was dean of the Yale School of Management, to compile a series of case studies analyzing important decisions the company had made, including the switch to the Intel microprocessor and the decision to open the Apple Stores. Top executives spent time teaching the cases to new employees, so that the Apple style of decision making would be embedded in the culture' (Isaacson, 2011). 


Core competence is very important for any company to achieve competitive advantage in the industry. Prahalad and Hamel (1994) provides a framework about core competences customer value, competitor differentiation and extendibility and this essay examine why Apple Inc become so success due to core competence which developed by the framework. Customer value shows that importance of a firms develop a sustain technology to achieve competitive advantage. Secondly, competitors differentiation requires a firm develop not just product differentiation but also the idea that pass to the stakeholders. Lastly were extendability that encourage firms to develop new products in the almost the same industry. Hamel & Prahalad (1994) framework shows weaknesses that do not cover certain aspect that are important for the company in the industry such as knowledge. Knowledge founds so important to enhance innovation which is so important that in technological industry because the frequent change technology and customers value. It is encourage to study others core competence framework which may explain the core competence in a wider coverage and it is leave for the next research.

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