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Characteristics of Core Competencies

The core competencies talks about consumers, competitors and the leverage. It tells us about the relationship of supplier and a customer which involves the dedication of an employee, the development of the product and the culture of the product. It has different criteria’s which fulfils its requirements: It is very hard for a competitor to imitate and not that easy to survive. The leverage can be done a wide manner for products and markets. The experience of the customer and the benefits which has been given to customers matters a lot.

There are different characteristics of core competencies:

1. It should be cost effective and scalability should be there.

2. It also includes the unique and rich data sources

3. It provides collective learning’s in an organization

4. It involves the skills and abilities of the employees

5. It helps in communication, involvement and a dedication as well as commitment in an organization or a firm.

6. It helps in unique set of skills

7. It helps in building the correct strategy

8. It also helps in achievement of the competitive advantage.

9. It also focus on the level of competencies

10. It also develops and builds the strong leadership

11. It delivers fundamental benefits to the customer

12. It focus on customer group

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. For example: Why does Dell have such a strong position in the personal computer market?

Core competencies that are difficult for the competition to imitate:-

Online customer "bespoken" of each computer built

Minimization of working capital in the production process

High manufacturing and distribution quality - reliable products at competitive prices

A competence which is central to the business's operations but which is not exceptional in some way should not be considered as a core competence, as it will not differentiate the business from any other similar businesses. For example, a process which uses common computer components and is staffed by people with only basic training cannot be regarded as a core competence. Such a process is highly unlikely to generate a differentiated advantage over rival businesses. However it is possible to develop such a process into a core competence with suitable investment in equipment and training.

It follows from the concept of Core Competencies that resources that are standardized or easily available will not enable a business to achieve a competitive advantage over rivals.

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? Why it is successful in creating core competence for the brand?

Core Competencies that enable Saga to enter apparently different markets:

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

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

3. Skills in customer relationship management

Core Competencies are not seen as being fixed. Core Competencies should change in response to changes in the company's environment. They are flexible and evolve over time. As a business evolves and adapts to new circumstances and opportunities, so its Core Competencies will have to adapt and change.

Thus to conclude I must say core competencies is very helpful in achieving the goals and objectives of the company. It should be cost effective and scalability should be there. It provides collective learning’s in an organization. It helps in maintaining the skills and abilities of the employees. It helps in communication, involvement and a dedication as well as commitment in an organization or a firm. It helps in unique set of skills. It helps in building the correct strategy. It also helps in achievement of the competitive advantage. It also focus on the level of competencies, it also develops and builds the strong leadership. It delivers fundamental benefits to the customer and It focus on customer group.

Core competencies are those capabilities that are critical to a business achieving competitive advantage. The starting point for analyzing core competencies is recognizing that competition between businesses is as much a race for competence mastery as it is for market position and market power. Senior management cannot focus on all activities of a business and the competencies required undertaking them. So the goal is for management to focus attention on competencies that really affect competitive advantage.