Core Competencies

• What are core competencies?

  Unique strengths or abilities that allows a company to outperform its competitors.
• What section in a SWOT analysis links closely with core competencies?

  Strengths
• How can core competencies arise?

  • Collective learning/expertise within a business
  • Ability to integrate skills and technologies
  • Ability to deliver superior products and services
  • Ways a business is differentiated to be competitive
• What are the three conditions for something to be a core competency?

  • It must provide consumer benefits
  • Hard to imitate by competitors
  • It should be widely used to many products and markets
• What are examples of core competencies?

  • Innovation
  • Customer service
  • Successful marketing techniques
  • High quality
  • Large size so has buying power to reduce costs so can lower prices
• What did Prahalad and Hamel suggest?

  A business should focus on their core competencies and non-core activities should be outsourced
• Why are core competencies important to a business?

  • Brand loyalty
  • Achieve added value
  • Lower price elasticity of demand
  • If the business can patent/copyright then rivals will be unable to replicate so rivals cannot compete
• Why can it be hard to maintain the quality of core competencies?

  Dynamic nature of business:

  • Technological changes
  • Economic changes
  • Legal changes
  • Environmental changes
• What are the problems with outsourcing non-core activities?

  • Quality issues
  • Over reliance on external provider
• It is possible for a business to become complacent about its core competencies