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The concept of core competency was popularized by C.K. Prahalad and Gary Hamel. The authors highlighted that the rising competitiveness in the market is likely to make it difficult for organizations to sustain, unless that develop their own distinguishing feature or achieve exclusive value creation. Core competencies of an organization are its distinct competitive advantage, which sets it apart from other market players. ItInvolves a specific way in which the company and its workforce operates, that creates intended differentiation. The concept of core competency can be quite useful for your marketing essay or any marketing case study. In this article we have discussed about the concept of core competency and its implications for organizations and their long-term success.

What is Core Competency?

Core competencies of a firm are its key strengths, relative to other market players, which provides the fundamental basis for offering added value to the stakeholders. These competencies can take various forms such as technological know-how, unique product, service and process design, and relationships with customers and suppliers. The core competency needs to fulfill three fundamental criteria, which are:

  • The competence should not be easy to imitate
  • The competence should be reusable for multiple products and markets
  • The competence must contribute to the value offered to the customers and their overall experiences

The authors C.K. Prahalad and Gary Hamel have further stated that the core competencies of a firm can help in building certain core products, which can be further used to develop many more products for the end users. In simple words, core competency determines the exclusive capacities that an organization has which enables it to create unique values for its stakeholders, especially its customers. In order to achieve such competitive advantage, a company needs to follow the four dimensions of core competency. These dimensions can be used in your college essay to while designing the core competencies for your business plan.

Dimensions of Core Competency:

  • Knowledge, skill, and technological developments
  • Operational processes
  • Managerial systems
  • Values, Customs and Norms

Let us now look at each one of them individually. The first dimension refers to the knowledge, skill and technologies in an organization. Firms invest extensively on research and development to create new technologies and new skill sets in order to strengthen its competitive advantage. These developments allow the firm to create value which are not delivered by other rival companies. It should be noted that most technological advancements of an organization are its intellectual properties and thus cannot be imitated by others. This as a result creates a strong competitive advantage for the firm.

Secondly, the operational processes involve the technical systems which are used to carry out the core activities of the firm. For example, a manufacturing company is likely to develop a production process which is highly efficient, that can produce high quality finished products from lower quality of raw materials in short duration of time. This as a result allows the firm to have better cost advantage, due to its ability to produce better products in higher quantitywithlesser amount of resources. The operational processes also highlight the ability of the company to deliver better services. Faster responsiveness and higher value generation can lead to strong differentiation in the market, thus leading to higher brand preferences.

Thirdly, the managerial systems refer to the strategies adopted by the higher management which coordinates the core activities to yield more value for the stakeholders. It is important for the company to create effective strategies which that streamlines the supply chain and increases its efficiency. Building good relationship with the suppliers and distributors helps in seamless procurement of the raw materials and the fast distribution of the finished products to the target markets. Without proper coordination, the companies cannot achieve higher quality which can set it apart from other market players.

Finally, the values, customs and norms are the cultural elements within the organization which determines which knowledge must be captivated and which knowledge creation activities are encouraged in the organization. Different organizations have their own culture and customs, which determine govern their operational activities. One firm may choose to achieve differentiation by strengthening its supply chain through vertical integration so that they can offer low priced products. On the other hand, another firm may focus on research and development to offer unique and valuable products to its customers.

Core Competency and Competitive Advantage

The core competency of an organization is closely associated with its ability to create strong competitive advantages. As mentioned earlier, the core competency refers to the ability of an organization to create unique value for its stakeholders. These values are unique as they are hard to imitate for other rival companies. In this context, it should be noted that if a firm possesses resources and abilities superior to that of the competitors and as long as it adopts the right strategies to exploit these resources and capabilities, then it can foster strong competitive advantages. Thus, the superior core competence leads to more competitive advantages. However, it should be noted for your college essay, that the sustenance of competitive advantage depends upon  three key characteristics of the core competence which are: durability, transferability and replicability. The competency of the firm should last a long period of time, so that it can be thoroughly exploited for its benefits. Secondly, the harder it is to transfer the resource, the more sustainable the competitive advantage is. Finally, the competency should not be replicated or purchased.

Competency Example: Apple

Apple is one of the largest and most reputed technology companies in the world. It is best known for its premium quality products which offer superior value to its customers. Over the years, Apple has developed extremely strong core competencies which makes it the most valuable brand in the global market. Apple’s competitors are constantly trying to create superior values in order to stay ahead of the company. However, the competitive advantage of Apple earned from its core competency fulfills the three key criteria of successful core competency. First of all, Apple’s technology cannot be imitated. The company uses its own proprietary software on its devices which offers a unique user interface and experience. Next comes reusability, where Apple owing to its vertical integration has developed its own custom microprocessors, which can be used in multiple devices such as iPhone, iPads, Apple TV, and even future Mac computers. This as result allows the company to take advantage of higher economies of scale.The final criterion is that the competency should be beneficial to the customers. The unique product design of Apple offers superior value to its customers, in terms of overall experience and utility.

The core competency of Apple lies primarily on its technological developments and strong brand preference among the customers. This has enabled the firm to create a cult following for its product that offer extremely unique experience that cannot be offered by any other market player.

Summing it All

Before you start writing papers in college on core competency, let us firm recapitulate what we have learnt from this article. The core competency of an organization refers to the resources and capabilities that sets it apart from other market players. These competencies allow the firm to create a strong differentiation among the customers, which eventually forms its competitive advantage. A firm’s core competencies should be difficult to imitate, reusable across multiple product and service categories of the company and it should contribute to the overall experience of the customers. Core competencies can originate from various aspects such as technological know-how, efficient operational processes, supplier and customer relations, managerial strategies, and values and customs.

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