Core Competencies

• Core competencies

  Something which is unique that a business has or can do which enables it to compete effectively
• Core competencies

  • Arise from the collective learning or the expertise within the business
  • Ability of a business to bring together a host of different skills and technologies to create something unique
  • Enable a business to differentiate itself from the competition
• Possible examples of core competencies

  • Ikea's unique organizational culture based on thrift and design capabilities
  • Apple's focus on design and integration of software and devices around the app ecosystem
  • Domino's integration of systems to enable efficient pizza delivery
  • Starbucks' ability to localize the coffee shop experience
• Prahalad and Hamel suggested businesses focus on core competencies and outsource non-core activities
• Criticism of Core competencies:

  • Potential for over-zealous outsourcing
  • Difficult to identify core competencies that are genuinely unique
  • Possible for complacency in investing
• What damage would complacency in investing do to a business?

  Loss of competitive edge
• What is the first condition for a condition to be considered a core?

  Does it provide consumer benefits?
• Prahlad and Hamil (1990) suggested that if functional areas, activities or skills are not regarded as core competencies, then they should be outsourced
• Importance of core competencies

  • If you're able to patent or copyright it, then your rivals are unable to use it and therefore they will not be able to compete
• It's hard to maintain core competencies over time due to the dynamic nature of business because there's always going to be external forces to consider.
• If you follow the advice of outsourcing skills or activities that are not regarded as core competencies, you will undertake the problems and limitations of outsourcing, such as quality issues or over-reliance on external providers
• Example of a core competencies

  Business is incredibly innovative
• Example of a core competencies

  Business has good customer service
• Example of a core competencies

  Able to execute successful marketing techniques
• Example of a core competencies

  Business has high quality
• Example of a core competencies

  Business has buying power.
• What is a condition to be considered a core competencies

  Is it easy for competitors to imitate?
• What is a condition to be considered a core competencies

  Can it be leveraged widely to many different products/markets?
• Importance of core competencies

  Likely to give brand loyalty
• Importance of core competencies

  May achieve added value
• Importance of core competencies

  May lower PED