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Core Competencies

Things You Can Do Better Than Your Competition


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"A core competency is an area of specialized expertise that is the result of
harmonizing complex streams of technology and work activity."
~ C.K.Prahalad


Core Competencies Creating Sustainable Value Sustainable Competitive Advantages Differentiation Strategies Creating Customer Value Discover New Opportunities Market Opportunities Create Your Market Niche Vadim Kotelnikov Distinctive Corporate Capabilities Core Competencies - definition, characteristics, benefits



Defining Your Core Competences

Three Main Characteristics

  1. They should make a disproportional contribution to stakeholder value

  2. They should open doors to other opportunities

  3. They should represent such a unique blend of tacit and explicit knowledge that it cannot be copied by competitors

What Does the Core Competence Achieve?

  1. Enables the creation of new products and services that provide potential access to a wide variety of markets.

  2. Makes a significant contribution to the customer value and enables a business to deliver a fundamental customer benefits the perceived customer benefits of the end product.

  3. Helps create sustainable competitive advantage as it is competitively unique and difficult for competitors to imitate.

Creating Sustainable Profits: 9 Questions To Answer


Individual Competencies vs. Core Competencies

  • Individual competencies stand alone and are generally considered in isolation.

  • Core competencies are harmonized, intentional constructions. They are more than the traits of individuals. Capabilities are considered core if they differentiate a company strategically. Core competencies are aggregates of capabilities, where synergy is created that has sustainable value and broad applicability. That synergy needs to be sustained in the face of potential competition and must not be specific to one product or market.

The Framework for a Growth Strategy: Four Rules

By: Ram Charan and Noel M. Trichy5

  1. Look at your business from outside in.

  2. Enlarge the pond you fish in look beyond your industry's boundaries and existing markets to the customer's real needs.

  3. Find market segments that are growing or create them.

  4. Build new core competencies to capitalize on your new opportunities.


Eight Attributes of Business Success

By Peters and Waterman

  • Emphasis on doing what they know best ("sticking to the knitting")... More

7 Dimensions of Strategic Innovation

  • Core Technologies and Competencies leveraging and extending corporate assets... More

What: is Core Competency?

Core competencies are the most significant value creating skills within your corporation and key areas of expertise which are distinctive to your company and critical to the company's long term growth. Your company's core competencies are the things that you can do better than your competitors in the critical, central areas of your company where the most value is added to your products. These areas of expertise may be in any area from product development to employee dedication.

A competence which is central to your business's operations but which is not exceptional in some way should not be considered as a core competence, as it will not generate a differentiated advantage over rival businesses. 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.4

Core Competence vs. Sustainable Competitive Advantage

If a core competence yields a long term advantage to the company, it is said to be a sustainable competitive advantage.

Corporate Capabilities

Build Synergies

A corporation that builds on core competencies utilizes skills that combine to strengthen value chains and build greater competitive advantages. This leads to synergies among business units, whereby they become more productive together than independently.  >>>



Core Competence as a Team Sport

A core competence is a combination of complementary skills and knowledge bases embedded in a group or team that taken together makes it possible to provide a superior product.  >>>

10 Commandments of Innovation

Have a Dream. Focus on your core competences and competitive advantage... More

Success Stories Best Business Practices Tesco

Tesco was very successful in capturing leadership of the market for online grocery shopping due to the following core competencies that mean customer value the experience so highly4:

  • Designing and implementing supply systems that effectively link existing shops with the web site

  • Ability to design and deliver a "customer interface" that personalizes online shopping and makes it more efficient

  • Reliable and efficient delivery infrastructure (product picking, distribution, customer satisfaction handling)

The Tree of Online Success

How To Create Greater Value Online

Internet Business Models

Success Stories Best Business Practices Black and Decker

Black and Decker's core technological competency is in 200 to 600 W electric motors. All of their products are modifications of this basic technology (with the exception of their work benches, flash lights, battery charging systems, toaster ovens, and coffee percolators).

They produce products for three markets2:

  1. the home workshop market in the home workshop market, small electric motors are used to produce drills, circular saws, sanders, routers, rotary tools, polishers, and drivers.

  2. the home cleaning and maintenance market in the home cleaning and maintenance market, small electric motors are used to produce dust busters, etc.

  3. kitchen appliance market in the kitchen appliance market, small electric motors are used to produce can openers, food processors, blenders, bread makers, and fans.

Success Stories Best Business Practices Saga

Saga managed to establish strong leadership in supplying financial services (e.g. insurance) and holidays to the older generation. The following core competencies enabled Saga to enter apparently different markets4:



  1. "The Core Competence of the Corporation," C.K.Prahalad and G.Hammel

  2. "Core Competence," Wikipedia

  3. "Strategic Management", Alex Miller,

  4. "Core Competencies",

  5. "Every Business Is a Growth Business," Ram Charan and Noel M. Trichy