Core competency is simply something that a business can do well. Wikipedia further explains that core competencies must meet three criteria:
1. It provides consumer benefits.
2. It is not easy for competitors to imitate.
3. It can be leveraged widely to many products and markets.
It is important for a business to know and build on their core competencies because it provides long-term competitive advantage. It also gives consumers a reason to support the business because this ‘unique expertise’ is something they truly value.
Core competencies typically come in the form of special skills and abilities, exclusive technologies, unique processes and strong professional relationships. There is no single formula on how you can determine the core competency of your business. It can only come by careful self-evaluation and by analyzing the market performance of the business.
• Proctor & Gamble: Superior marketing-distribution skills and research and development capabilities.
Core competency can be inherent or created. This means that if a business has ‘no unique qualities’ - then it can just create proficiency towards a set of chosen core competencies to give itself an advantage.
It is important to remember this because in a highly competitive market, rivals can invest and imitate the core competencies of your business. When this happens, your ability to create and realize new core competencies will ensure that your business keeps its market advantage.
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