Question

A special ability of a company that competitors find extremely difficult or impossible to equal is called its core competency. Discuss what factors must companies consider to identify their core competencies in global markets?

Answer 1

the following factors should be consider to identify the core competencies...

(1) Provides potential access to a wide variety of markets:-

The key core competencies here are those that enable the creation of new products and services.

Example: Why has Saga established such a strong leadership in supplying financial services (e.g. insurance) and holidays to the older generation?

Core Competencies that enable Saga to enter apparently different markets:

- Clear distinctive brand proposition that focuses solely on a closely-defined customer group

- Leading direct marketing skills - database management; direct-mailing campaigns; call centre sales conversion

- Skills in customer relationship management

(2) Makes a significant contribution to the perceived customer benefits of the end product:-

Core competencies are the skills that enable a business to deliver a fundamental customer benefit - in other words: what is it that causes customers to choose one product over another? To identify core competencies in a particular market, ask questions such as "why is the customer willing to pay more or less for one product or service than another?" "What is a customer actually paying for?

(3) Difficult for competitors to imitate :-

A core competence should be "competitively unique": In many industries, most skills can be considered a prerequisite for participation and do not provide any significant competitor differentiation. To qualify as "core", a competence should be something that other competitors wish they had within their own business.