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Core Competency

In: Business and Management

Submitted By chaitanyapathak
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Key Points • • •

Core competencies are capabilities that have developed to the point where they provide competitive advantage for an organization. Core competencies help organizations access key markets and deliver value to end customers. The assumption that every organization has a core competence is not correct; there are specific criteria or tests that help determine if capabilities are in fact core competencies.

Main Thoughts A core competence is a capability that has developed to the point where it has become a source of competitive advantage for an organization. Core competencies are not easy to develop nor can they be readily imitated. Organizations that have strong core competencies—such as Honda in engine manufacturing and Proctor & Gamble in brand management—are difficult to compete with. In these examples, it’s easy to see how the core competencies form the nucleus of each company’s respective strategy.

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Identifying Base Capabilities/Competencies - The starting point for identifying core competencies stems from an understanding of an organization’s base capabilities (or base competencies). Identifying and documenting core capabilities by functional area is a good starting point. Another way to capture capabilities is by using Porter’s Value Chain analysis. However, cataloging base capabilities and dubbing those that seem important to the organization’s success does not make them core competencies. Core competencies are only those capabilities those that meet the following four tests: Valuable - A capability must be valuable, specifically, it must contribute to value for customers. It must also help an organization capitalize on…...

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