Question

1- Does every company have a core competence? If not, what are the strategic implications if a company does not have a d...


1- Does every company have a core competence? If not, what are the strategic implications if a company does not have a distinctive core competence?

2- Which is more important in explaining the success and failure of companies in the rapidly changing environment: the ability to improvise or strategise? Why?

 

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Answer

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Competency: It is anything a firm does effectively, and a firm may have various competencies. For example, a manufacturing firm may be successful in keeping a low number of defects, and an advertising company may be successful in managing internal talent.

Competitive advantage: It refers to the elements that help a firm to manufacture goods or services at a low cost from its competitors. Elements include quality of goods, cost structure, branding, and customer service, etc. To gain a competitive advantage, the identification of competitors and customers are important. 

 

Core competency: It defines a competency, which is required for the overall growth, success, and performance of a company. It is also called distinctive competency. It is one of the traits that help to establish a business apart from the competition. It can be specific skills or practices that provide business with a distinctive competence. Distinctive competency should not be imitated by competitors of a business. If traits of a business are easy to duplicate, then they are not considered distinctive competencies. 

Distinctive competency helps a firm to get a competitive advantage over its competitors.

If a business is not different from its competitors, then customers will not buy products or services as there is no reason to invest their hard-earned cash. However, differentiation is required in business. Each organization required a distinctive competency to survive, grow, and earn profit.

Examples: 

  • Customer relation: When a company develop excellent customer experiences, it helps the company to get distinctive competency from its competitors. Excellent customer experiences include superior customer services and fast delivery.
  • Personnel: Talented and competent workforce onboard helps the company to establish distinctive competency from its competitors. A talented workforce with relevant skills and experience related to specific jobs helps to improve the productivity of the organization and to gain profit.

 

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