Core Competencies Analysis-Developing Sustainable Competitive Advantage

Find The Value Of Uniqueness

Have you ever given it a thought that what makes your business or you as a person unique, stands out from the crowd? What are the differentiated things that you perform and your competitors can not imitate and bring you real value?

The answer you may find in terms of unique products and services or your knowledge and expertise and these are your management tools core competencies.

In this article, you will come across a discussion regarding what are competencies, and how can you detect and use them, on both personal levels and corporate levels, to get ahead of your competition and always stay ahead.

By utilizing the idea, you will create the very most of the opportunities available to you:

You will concentrate on your efforts so that you can establish a distinguished level of skills in areas that are really important to your customers. Due to this, you will get the incentives that come with this expertise.

You will also get to know about the development of your own skills in a special way that complements your organization’s management tools and core competencies. By establishing the abilities and skills that your company values, you will be a winner of the career advancement and respect that you desire.

What Are Management Tools Core Competencies?

The first and foremost point for understanding the management tools core competencies is having an understanding regarding the businesses that need to have something that customers uniquely value if they are to make a good conversion rate.

Businesses which have nothing unique to differentiate them from their competitors that are in the market known as copycats, and they usually use just pricing strategy to stand out from the crowd.  The only thing that can be done by them is to drop prices and decrease the profit margin, as other copycat businesses always do the same to remain on the top by making profit margins thinner and thinner.

That is the reason that there is such a strong influence on building and selling unique selling points (USPs) in businesses.

If you are capable of providing something astonishingly good, customers will want to select your products and will be desiring to pay higher for those valuable products.

The question, though, is where the difference point comes from and how it can be consistently maintained.

In their prime 1990 paper “The Core Competence of the Corporation,” C.K.Prahalad and Gary Hamel argue that “Core Competencies” are some of the most essential sources of distinguishable points: these are the things that an organization can do amazingly well and that no one else can copy instantly enough to impact competition.

Prahalad and Hamel use examples of gradual growth and not forgotten Prime Corporation that failed to identify and capitalize on its strengths. He compared them with the top performers in the 1980s like Canon, Honda, and NEC, which had the transparent idea of what they were experts at, and which were great very quickly.

These organizations were more concentrated on their management tools and core competencies and consistently worked to establish and reinforce them, their valuable products were more innovative than those of their competitors in the market, and customers were ready to pay a higher amount for them. And they switched effort away from different parts where they were weak and additionally focused on areas of strength, their valuable products made to become market leaders.

There may be a great range of things that an organization does that it can perform well. Therefore, Hamel and Prahalad give three tests to view ether they are real management tools’ core competencies:

Relevance – The competence occurs when your company gives your customer something that really emphasizes them to select your product and service. If it fails to do this, then it has no impact on your competitive position and is not your core competence. You should select another thing as your core competency.

The complexity of imitation – The core competence should be hard to reduce. This enables you to offer products that are amazingly better than those of your competition. And since you are continually working to enhance these skills, it means that you can maintain your competitive position.

The wideness of application – It should be something unique that welcomes a good number of sufficient markets. If it only welcomes a few small, niche markets then success in such markets will not be sufficient to maintain important growth.

For example, you may consider great industry information and skills to be a core competence in serving your sector. Therefore, if your competitors have equal skills, then this is not a core competence. All it does to create it more difficult for the latest competitors to come into the market. More than this, it’s not likely to facilitate you much in transferring into new markets, which will have developed experts by now. (Test 1: Yes. Test 2: No. Test 3: Probably not.)

Reproduced with permission from “The Core Competence of the Corporation” first published in Harvard Business Review, May-June, 1990.

Using Management Tools Core Competencies In Your Business And Career

If you want to determine your management tools’ core competencies, go through the following steps. It will help you to get the best core competency:

  • The first and foremost thing is to BRAINSTORM the points that are vital for your customers.
  • If you are doing this for your business, recognize the factors that impact the purchase decision when they’re buying valuable products or services such as yours. Ensure you move beyond the just product or service features and add all the decision-making points.
  • In case you are doing this for your personality then brainstorm the elements, for instance, that people use in assessing you for yearly performance promotion or reviews, or for the latest roles you want. It may be hard to come up with the fundamental unique management tools and core competencies but keep the idea in your mind and work to establish some.
  • Then go in-depth into these factors, and recognize the competencies that lie behind them. For the corporate example, if customers value little products, for example, cell phones, then the competence that matter may be “component integration and miniaturization.”
  • Brainstorm your presented competencies and the things you are an expert to do.
  • Once you have the list of your management tools’ core competencies, start screening them against the test of the above-mentioned points relevance, difficulty of imitation, and breadth of application, and look if any of the competencies you have made the list are core competencies.
  • For the list of factors that are essential to customers, start screening them by using similar tests to ensure if you could make these management tools core competencies.
  • At this phase, review the two screened lists and give a thought to them:
  • If you have recognized management tools and core competencies that you previously have, then great! Start working on them and ensure that you build them as far as sensibly possible.
  • If you end up with no management tools or core competencies, then look at those points that you can establish and work to make them.
  • And still in case you do not have any management tools or core competencies and it doesn’t look as if you can develop any of it that customers would value then a couple of things can be possible that there is something else you can use as your USP in the market or think about determining a new atmosphere that is suitable for your competencies.
  • Give a thought to the most time-consuming and expensive things that you do either as a company or a corporation.
  • If any of these do not contribute to your core competency, ask yourself if you can outsource them successfully, clearing down time so that you can concentrate on management tools’ core competencies.

For instance, being an individual, are you still doing your ironing, cleaning and decorating? Being a small firm, do you own HR, payroll and accounts? As a startup business, are you producing non-product components by yourself or performing non-core activities that do not contribute directly to your main product?

Pro Tip:

You may consider it quite hard to determine any authentic management tools or core competencies in your firm. If you have got an efficient business that is consistently outperforming rivals then perhaps something else is playing its role in your success. You need to spot it out to strengthen it.

Therefore, if you are working very hard and you are still failing to make a profit then you need to think carefully regarding differentiated competitive positions.

Criticisms Of Management Tools Core Competencies

While extremely powerful, Prahalad and Hamel’s work on core competencies has not been without its critics.

For example, British economist John Kay investigated how 11 of the 12 organizations profiled by the couple had operated in the decade since the publication of their article and found that they had underperformed in comparison with the market average at the moment.

Author and industry analyst Daniel W. Erasmus has argued that mainly focusing strongly on the management tools core competencies can restrict the ability of an organization to adapt and can make distance from those people who do the non-strategic work.

While discussing what he calls the “emotional infrastructure” of a company, Rasmus said, “Here’s the trouble with the core competency model. As parts of the business are lopped off, the personnel become more disjointed. People work for diverse organizations with unusual goals and objectives, unlike business cycles and different cultures.

“An outsourced receptionist, for instance, spends his or her entire day working with people from other companies other than the one who writes their check. How should this person relate to those they work with? How should the ’employees’ relate to this ‘service worker’?”

Points To Be Noted

Core competencies are the abilities that are significant to a company’s accomplishment of competitive benefit. They are the products, services, expertise, process and other points that set you different from your competitors.

They can also be considered as the personal level to establish your own skills to facilitate you to enhance your career.

Originated by C.K.Prahalad and Gary Hamel, there are three important tests for management tools core competencies:

  • Relevance: reasons for customers choosing you over any competitor available in the market and offering the same product and service as yours.
  • The difficulty of imitation: your providing must be robust and unique that can enable you to stand out from the crowd.
  • The breadth of application: your competency offers access to a wide range of new markets.

Read more: How Hiring A Consultant Can Help Improve Business Performance?





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