Core Competencies
A company’s core competency is its core activity.
It is the company’s main area of business and something that it can do well or better than its competitors.
One of BMW’s core competencies is the development of combustion engines. BMW have used this core competency to significantly reduce fuel consumption and emissions in their engines whilst increasing performance and torque.
Canon’s core competency lies in the development of imaging products for the home and the office, for example, cameras and printers.
For a company’s skill to be regarded as its core competency it must fulfill certain criteria. It must benefit the customer by making a significant contribution to the quality and value of the end product, it must be hard for competitors to imitate and it must be able to be leveraged widely to many products and markets.
If a core competency yields a long-term advantage to a company, it becomes known as the company’s sustainable competitive advantage (SCA).
Modern business theory tends to take the view that most of a company’s activities that do not make up part of its core competencies should be outsourced.
