A competitive advantage is what every business aims to achieve, something that distinguishes it from its competitors and appeals to its customers. Sometimes, this competitive edge can be reduced to the business core competencies—the amalgamation of skills, knowledge, and abilities that a company uses to surpass its competitors in the market.
The concept will be utilized in structuring the business’s strategic direction and orienting its operations to achieve sustainability and innovation.
What Do Core Competencies Refer to?
Core competencies are the products, services, skills, and capabilities that define the main features of a business, providing a significant competitive edge. They help firms outperform their competitors by adding more value to the customers they serve, which is something that their competitors cannot easily mimic or surpass.
For corporations, understanding their core competencies is essential for retaining their client base, building their reputation, and expanding their business through the creation of new sales and marketing plans within the company.
Business Core Competencies Examples
Some of the common core competencies of companies are:
United quality
Google is the most popular search engine in the world and a well-developed service provider of services such as Gmail and Google Drive. Its main source of competitive advantage is the fact that the company produces extremely high-quality products across its platform, whether it be in terms of simplicity of use or the vast amount of organization and inventions it can boast.
Unmatched Value
Dropbox is unique in so many ways because one can get limitless storage capacity, easy file-sharing capabilities, e-signing facilities, watermarking, and still pay a fee that makes sense as far as the clientele is concerned.
Unstoppable innovation
QuickBooks is a financial software platform that is continually evolving and introducing powerful features to support small and medium-sized businesses. It is this unstoppable innovation that places it one step above its competition in an active market.
Smart, successful marketing
Target has an excellent branding: its red-and-white motif, a mascot named Bullseye, and well-thought-out marketing campaigns appeal to the company’s customer base greatly and facilitate their loyalty and recurrent purchases.
Impressive dimensions and purchasing strength
McDonald’s uses its size and considerable buying power to control prices and maintain tight control on the relationships with suppliers, a major strength in an intensely competitive industry.
What are the Steps That You Can Use to Identify Your Business Core Competencies?
Your own definition of core competencies may sound imposing; however, after going about these progressive steps, you shall be able to simplify the whole process:
Check out your customers and clients
Take into account your primary clientele base, which are your most loyal customers, and what is the most preferred thing they like about your business? This may serve as a good pointer to your principal competency.
As an example, an organization that provides educational services to children with special needs can peg personalizing its services to their individual learning styles as one of its core strengths.
Return to your mission statement for the firm
Have you started your company to address a specific problem or a gap in your industry? Your mission may emphasize a special competency, such as producing high-quality, handcrafted furniture in the era of compromised production quality of many mass manufacturers.
Discuss your core competencies with your team
Ask your team members. What do your employees tell you that your business is doing exceptionally well when compared to the competitors? Their intersection in the answers can reflect on your real core competencies.
An example may be the potential of your restaurant to deliver a favorite meal in a shorter period or more correctly than your rivals could.
Ensure your core competencies are actually core competencies
The best thing to do is to ensure that your competency cannot be easily achieved or surpassed by your competitors. When many other firms can do the same thing equally well, it is not a core competency; properly speaking, it is a normal industry practice.
Outsource as needed
On some occasions, outsourcing enables you to invest more in what you are good at. To the extent that you are a furniture manufacturing company, you do not need to worry about marketing because you can outsource and concentrate on designing furniture, which is your real strength.
Test your core competencies
After ascertaining your core competencies, you need to start validating them in the market. When more and more customers turn to your business over that of your competitors, then that is a great indicator that you are doing something unique indeed.
Key Takeaway
Conduct a competitive analysis to evaluate your business’s competitive position, identify its true strengths, and become aware of new opportunities for further development.
You are not competing when you are aware of your core competencies in business, but you are shaping the market’s history.
Importance of core competencies in business for success
When a company is concerned with its core competencies in its strategy making, then this preconditions further development and innovations. It occurs due to several important reasons:
Better Customer Loyalty
The clients like the companies that are the experts in providing them with the best. This loyalty can be transformed into repeated business, effective word-of-mouth, and an increasing base of customers.
Improving Differentiation in the Market
Companies that define their distinctive competencies and fully explore their capabilities are less exposed to competition. Such a distinction enables them to be the best among their competitors, even in congested markets.
Boosted Profits
Once you are known to offer something that is beyond the reach of others, you can charge more and achieve better profits, embodying financial stability in your business.
Innovation-Based Success
With a clear understanding of your competence set, you have the opportunity to promote innovation. This progressive reasoning enables businesses to be flexible and progressive in a dynamic market.
If you need to expand your business and achieve quantifiable results within your industry, Dr. Ameet Parekh can help you determine your core competencies and utilize them as influential growth engines.
See Our Business Growth Plan today to get your special formula to sustained success.
