What is Core Competence

The idea of Core Competence is becoming more and more important in today's world as businesses try to outsource as many activities as they can and are focusing their efforts on things they do well. All the Management Gurus want the businesses to focus only on their core competence.

WHAT IS CORE COMPETENCE:

Core Competences means that businesses need to have something that customers uniquely value. "Me Too" businesses which have nothing unique to distinguish them from competition compete on price - they drop the prices and margins become thinner and thinner.Therefore its is necessary that businesses need to identify and build USPs (Unique Selling Proposition). If you can offer something uniquely good, customers will be willing to pay a premium for the same. The question now is "HOW TO GET THIS UNIQUENESS?".

There are 3 important criteria which an idea must pass before it can be called "CORE COMPETENCE". These 3 criteria are as below:

1. Relevance: The competence must give your customers something that strongly influence the customer to choose your product or service. If it does not, then it can't be called a core competence.
2. Difficulty of Imitation: The core competence should be difficult to imitate. This ensures that you are in a position to develop products which are better than those of your competitors. Moreover, since you are constantly focusing on your core competence, you are able to sustain its competitive position.
3. Breadth of Application: The core competence should be such that it opens up a good number of potential markets. If it opens up only few niche segments, then the success in these niches will not be sufficient to sustain significant growth.

The above 3 criteria are very critical for an idea/ skill to become core competence for a business. Once the above 3 criteria are met, then a company can develop on it and gain a foothold in the market.