Build On The Core Competency Of Your Business

Posted by Fitz Villafuerte under Business on February 10, 2009

One of the things that make a business successful is when it is able to leverage on its core competency.

When competition is high and the market is saturated, building on the core competency of the business is usually the best strategy to outprofit your rivals.

But what exactly is core competency? Why is it important? How do you determine the core competency of your business? And how do you use it as a business development strategy?

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.

unique

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.

Examples of Core Competency of Popular Companies:

  • Honda: Expertise in gasoline engine technology and small engine design.
  • Proctor & Gamble: Superior marketing-distribution skills and research and development capabilities.
  • Intel: Design of complex chips for personal computers.
  • Sony: Expertise in electronic technology & ability to use this into developing and manufacturing innovative products.

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.

different

Personal Case Study on Core Competency:
I own an internet cafe that has been running for more than five years already. I believe that the reason why it has managed to survive intense competition in the area is because of personal and business core competencies which I’ve leveraged through the years. A couple of them are:

  • Skills: I have good technical knowledge on computers. Furthermore, I have built a personal network of resource persons to whom I can seek free technical advise. Meanwhile, other owners in my area would have computer technicians employed in their business.
  • Technology: The business uses a computer log and monitoring software which does not only serve as a point-of-sales system but also provides a comprehensive time and usage analysis. Other shops in the area simply use a time monitoring POS application.

How do these core competencies help the business?

First, having technical computer skills lessens my costs when units break down because I can diagnose and fix the problems myself. I also leveraged this skill to offer desktop and laptop computer repairs – a service that other shops in the area do not have.

On the other hand, the monitoring software I use allows me to study historical patterns and behaviors of customers – this helps me in coming up with shop promotions and other marketing campaigns.

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References:
Wikipedia, The Free Encyclopedia. “Core Competency“. 30 January 2009.
Principles of Strategic Management. “Implementing Strategy:
Core Competencies, Reeingineering, and Structure. 31 August 1996.

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Photos courtesy of Zamzara

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3 Responses to “Build On The Core Competency Of Your Business”


  1. Gugol says:

    ahh… ganun pala yun… kaya pala lagi ko na lang naririnig sa kumpanya namin iyan…

    kaya lang parang medyo nasasakal kaming mga empleyado lalo na kapag malaki yung kumpanya tulad nung pinapasukan ko. marami kasing OA na managers e.

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