Core competence in the company
In these times of hyper competition most of the companies they are in constant tension by the attacks of the competitors; attacks i) that are increasingly aggressive, ii) more desperate and ii) that come from increasingly varied competitors. The result and the cause of this is a continuous deterioration of the margins that forces to duplicate the efforts to be able to conserve the profits. For this reason, the issue of competitive advantage will be recurring and in this document we want to present some contributions that we consider relevant.
A “core competence” is a capacity that:
i) is critical to achieving the competitive advantage of the business and
ii) where you have an outstanding performance; you do it radically better than everyone else. It is vital for you to clearly identify your “core competence” and from this develop innovative products and access diverse markets.
Barney presented the characteristics that should have resources or capabilities of a company to be considered as “core competence” and to be able to generate sustainable competitive advantages. These characteristics make up the model VRIO which is an acronym for Valuable, Rare, Inimitable, and Organization. The following questions, with the help of Barney, Day (Wharton School) and Hamel & Prahalad (London School, Michigan), may help you:
q Capacity is valuable to you?
q It is valuable to your also information?.
q The capacity allows you to take advantage of the opportunities of the environment ?.
q Does it allow you to defend against threats?
q Does ability help differentiate you?
q Does this ability give you opportunities to create products and services that innovate the market?
q This ability allows you to enter diverse markets in an innovative way?
q Will the value of the "core competence" be preserved despite changes in the environment?
q Capacity is owned by few companies?
q Is it scarce?
q Does capacity imply a barrier to entry for your competitors?
q The ability is difficult to imitate by its competitors?
q Is it expensive for competitors to imitate, duplicate, or copy capacity?
q Do you have any protection on capacity?
q Are competitors unclear about how capacity generates competitive advantage (causal ambiguity)?
q Capacity is generated by tacit knowledge accumulated in practice or use?
q Capacity requires complex coordination with various other resources?
q You are prepared to effectively exploit the capacity?
q Do you have sufficient creativity and means to constantly improve capacity?
It is important then that you answer yourself:
i) How radically better are you than your competitors?
ii) What are the critical capabilities to achieve the competitive advantage of your business?
iii) How can I intelligently exploit these “core competences”