Reducing risk throughout the supply chain is best accomplished by identifying what a company is successful at or what they are the experts in. This is a company’s competency zone. Core competency is defined as a unique ability that a company acquires from its founders or develops that cannot be easily imitated. A company should never outsource its core competencies and activities that support it. On the other hand, Competitive advantage is defined as a superiority gained by an organization when it can provide the same value as its competitors but at a lower price, or can charge higher prices by providing greater value through differentiation. Show
However, in today’s changing supply chain world, viable long term competitive advantage is problematic. As technology advances, business leaders have realized that all advantage is temporary. Competitive success depends on how well a company and its associated supply chain(s) adapt to a rapidly changing market. Together core competencies and competitive advantages are used to improve the company. Core competencies are what give a company one or more competitive advantages, in creating and delivering value to its customers in its chosen field. Competitive advantage results from matching core competencies to the opportunities. A competitive advantage develops when two companies have a similar core competency and one company is more successful. Real World Company Example: Starbucks Starbucks core competencies can be defined as high quality coffee and products at accessible locations and affordable prices, a community to share in the coffee drinking experience, and a variety of choices. Starbucks also values ethics and good business practices. Starbucks competitive advantage is based off of: quality, service, ambiance, and culture. Starbucks directly controls every important step of its business, from buying high-quality coffee beans to designing its franchise decor. Starbucks is also so large that it has enormous influence over its suppliers and it can ensure competitive prices, superior quality, and the necessary quantities at the right time. To keep its competitive advantage, Starbucks is constantly innovating, improving its menu, and starting new businesses, such as selling energy drinks or coffee machines. Starbucks has recently concentrated on redesigning its sandwiches and bakery business, as well as integrating its Teavana products into stores. Core competencies and competitive advantages are closely related to one another as they both help companies achieve greater market share, customer satisfaction, loyalty and greater profits. Core competencies generally lead to competitive advantages, although this may not always be the case. Core competencies and competitive advantages both help a company stand apart from its competition, but are not the same. The article offers a clear explanation on each term and marks their similarities and differences through examples. What is Competitive Advantage? Competitive advantage occurs when a company is able to achieve a competitive edge with regards to is products, services, strategies, skills, etc. than its competitors. There are two types of competitive advantage; cost leadership and differentiation. A competitive advantage is something that will help the company stands out from its competitors. Competitive advantages can be achieved by gaining access to cheaper raw materials, through intellectual property, first mover position, convenience in location, etc. An example of a competitive advantage would be the edge that Google has above other search engines. Google is the best at optimizing searches and has pushed technology beyond what competitor’s thought was possible. A competitive advantage will aid a firm to differentiate its goods and services from competitive offerings. Having a competitive advantage can also contribute towards improving customer loyalty which can go a long way in times of financial difficulty. Building a strong brand name through creative advertising can aid in marketing a company’s competitive advantage. What is a Core Competency? Core competency refers to a specific set of skills and expertise that a company may have over its competitors. In order for a core competency to exist, 3 criteria must be met; those are market access, benefits consumers, unique and difficult to imitate. One of the most essential aspects of a core competency is that they help gain access to a range of markets and consumers. Core competencies also bring benefits to consumers in terms of lower cost and better quality products, and cannot be easily copied or imitated. Core competencies include things like, technological knowhow, skilled individuals, supply systems and processes, customer relationship management skills, etc. For example, Tesco has emerged as one of the largest retailers in the world because of their core competencies in effectively managing supplies through their innovative supply systems, customer focused selling strategies, personalized customer interface for online shopping, an efficient delivery mechanism, etc. Competitive Advantage vs Core Competency Even though these terms may sound quite similar to one another, competitive advantage and core competency are quite distinct. A core competency is a specific skill set or expertise that can lead to a competitive advantage. For example, a core competency in innovative supply systems can lead to increased efficiencies and lower costs; the lower cost being the competitive advantage. Volvo’s core competency lies in their ability to research and develop automobiles that offer the high protection and safety standards. The company’s competitive advantage lies in providing a differentiated product valued for its high safety standards that surpass its competitors. Summary: Difference Between Competitive Advantage and Core Competency • Core competencies and competitive advantages are closely related to one another as they both help companies achieve greater market share, customer satisfaction, loyalty, and greater profits. • Competitive advantage occurs when a company is able to achieve a competitive edge with regards to is products, services, strategies, skills, etc. than its competitors. • A core competency is a specific skill set or expertise that can lead to a competitive advantage. • In order for a core competency to exist, 3 criteria must be met; these are market access, benefits consumers, unique and difficult to imitate. Which statement best describes the relationship between core competencies and competitive advantage?As a company's core competencies become stronger, its competitive advantage becomes weaker.
What core competencies give an organization competitive advantage?Examples of core competencies in business. Consistently high quality.. Incomparable value.. Ceaseless innovation.. Clever, successful marketing.. Great customer service.. Formidable size and buying power.. How important is it to understand a company's competitive advantage and core competencies?Core competencies are the defining characteristics that make a business or an individual stand out from the competition. Identifying and exploiting core competencies is seen as important for a new business making its mark or an established company trying to stay competitive.
What is the difference between core competencies and common competencies?Competence is any area in which a firm or individual performs at a competitive level. A firm may have a competence in logistics or a professional may have a competence at coding. A core competency is any area that is essential to success in an industry or profession.
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