Core Competencies of Organizations
What are core competencies??
Core competencies are those skills and capabilities which a business requires to have a competitive advantage over other businesses. These skills and capabilities are gathered over with time and experience and become the distinguishing factor on which the business operates.
Organizations may have different types of core competencies such as excellence in customer service, marketing research, sales and distribution etc.
For instance, Honda has his core competence in designing engines, Pepsi Co competence lies in its extensive distribution network,Fedex has it in logistics whereas WalMart has it in providing low prices to its customers. Thus the core competence varies from organization to organization and forms the competitive advantage for that particular corporation on which other activities are based.
Why organizations develop or jump to new core competencies?
Core competence of an organization or a business cannot be fixed. Core competencies have to change with time in response to changing company’s environment. As a business adapts and changes with time, the core competencies also change with time and thus these competencies are flexible.
Companies develop new competencies because of following reasons :-
- to stay ahead of competition
Some organizations develop new core competencies to stay ahead of the competition so that their core competence is unique in the market and not copied by competitors.
- rival firms imitate them
Businesses also jump to new competencies when their rival firms imitate them. For instance an IT company has competence in a technical process which its competitor imitates; hence the IT company will look for developing a new core competence.
- changing technology
Companies whose competence is based on technology with time have to develop new competencies as the technology becomes obsolete soon in this fast changing world.
- to enter new markets or for geographical expansion
organizations also develop new competencies at times to enter new markets or for geographical expansion.
- changing customer needs
Firms also adapt to changing customer needs by changing or altering their core competencies. Many firms these days now focus on excellent customer service as the consumers these days are demanding high quality service and are easily dissatisfied when they do not get a good response from the employees or managers of an organization.