Question

In a short paragraph, discuss how an organizations core competencies affect the formation of the Business Strategy.

Answer 1

Answer: Core competencies are those capabilities and resources of the companies that provide them with the competitive advantage. Hence the core competencies help the companies to distinguish themselves at the marketplace. Business strategy is the plan of the company to achieve its organizational goals by defining the set of activities for achieving them. Thus the core competencies directly impact on the formation of the business strategies in the organization. The organizations prepare their strategies based on their core competencies. Developing business strategies by using the core competencies can enable the companies to use their core competencies for creating a competitive advantage.   The business strategies that are based on the core competencies of the organizations are very helpful in achieving the organizational goals as they take advantage of the strengths of the organization. The companies first need to understand their core competencies before preparing business strategies. This helps the companies to align their core competencies with their organizational goals and objectives. For example if the core competency of an organization is innovation then the organization needs to consider this and use it while developing a business strategy.