Concept of Core Competency

Aug 3 • Management Notes, Notes • 992 Views • No Comments on Concept of Core Competency

Concept of Core Competency

Every firm has some or the other capabilities in which it has skilled expertise. The firms try to make these capabilities as their core competency, which means something which the other firms find difficult to compete with. For discovering the core competency the managers need to conduct an internal analysis of their fir. There are few questions that the managers need to understand while performing the internal analysis, these questions are as follows :

  • How do the firm need to collect all the resources and capabilities to create something that can deliver value to the customers?
  • What would be the effect of the environmental changes on the core competencies of the firm?
  • Are there any substitute available for their core competencies in the market?
  • Can their core competency would be easy to imitate by the competitors or not?    Concept of Core Competency

Resources

These include the assets of the firm, the people in it and the value of the brand name that has been created. Resources are those inputs which the firm uses during its production process which includes capital needed, expertise of the staff, brand names, financial availability and talent of the managers. Resources can be of two types : Tangible resources which include physical, financial ,human resource and organizational resources. Intangible resources consists of goodwill, reputation in the market, technological advances and innovations.

Capabilities

The term capability is the ability of the firm to use its resources in order to achieve the desired objective of the firm. The capability of the firm comes along with the time and due to inter-relationships between the tangible and the intangible resources, sharing of the information among the employees.

Core Competency

These are those capabilities that makes the firm unique in delivering value to the customers. There are certain features that must be present in the core competency of the firm which are as follows.

The core competency must be :

  • Valuable – Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment.
  • Rare – Capabilities that are not possessed by every organization and is rarely found in any of them.
  • Costly to imitate – the core competency should be such that they are difficult to copy by the competitors and even if they try to copy it, then it would result in high cost.
  • Non- substitutable- the capability should be such that there must be no substitute to it that can be used in its place.

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