Understanding your company’s core competencies is essential for an effective business strategy. Without this knowledge, you can’t fully leverage strengths, address weaknesses, or meet your target audience’s needs.
So, what are core competencies in business? In this article, we’ll identify these key aspects to help your organization grow and stand out from competitors.
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What Are Core Competencies in Business?
Core competencies in business are the capabilities, resources, and skills that define an organization or company and give it a competitive advantage over others. As such, identifying these is crucial for a company to best allocate its resources and create new — as well as improve existing — business strategies suited for growth.
Defined core competencies also help in forging a clear and effective brand identity, further solidifying your reputation in the market.
Core Capabilities Definition: Personal vs. Business
Whether you are an individual or an organization, recognizing your core capabilities is essential to stand out. However, you should first learn how to differentiate between personal core competencies and business-oriented ones.
Personal Core Competencies
Personal competencies are the qualities you want to highlight and be known for, whether you're a hiring manager or a candidate. Some of the distinct competencies would be:
- Problem-solving skills
- Attention to detail
- Good interpersonal skills, teamwork, and leadership
- Strong oral and written communication skills
- Well-organized
Business Core Competencies
If you run a business, you should be familiar with your competitors and their offerings. When identifying the core capabilities, you should point out areas where you hope to stand out from your competitors. These may include:
- Adaptability, creative thinking, and innovation
- Customer experience
- Consistency and reliability
- Unique and empowering company culture
- Partnership with industry leaders
Examples of Core Competencies in Business
When considering core competencies, you should assess which products, services, unique skills, and abilities you want to include. If you’re having trouble identifying a product or service, we’ve compiled examples of core competencies in businesses to assist you.
Below are some company core competencies examples to consider:
- Google's Consistent High Quality
- QuickBooks' Continuous Innovation
- Dropbox's Incomparable Value for Money
- Amazon's Excellent Customer Service
- Target's Strategic & Successful Marketing
- McDonald's Formidable Buying Power & Size
1. Google's Consistent High Quality
Google, the world's leading search engine, undoubtedly tops the list of organizations known for its consistently high-quality software. Google has indeed driven the so-called fourth industrial revolution or the digital revolution that rules the world wide web today.
Across its suite of products like Google Photos, Maps, or Docs, the brand delivers unparalleled ease of use, a modern look and feel, helpful functionalities, and excellent organization options. Its unmatched quality and user-centric approach continue to be Google’s core competencies.
2. QuickBooks' Continuous Innovation
Continuous innovation can also be a core competency in business. A leading example of this is QuickBooks, a well-known platform in the accounting software industry. Over decades, the organization has consistently added new features and tools that set it apart from competitors.
Innovation, therefore, is the crux of this company’s competency model. With this, QuickBooks has established itself as the first choice for accounting software across businesses of all sizes.
3. Dropbox's Incomparable Value for Money
Offering products and services at a much lower price than its competitors can also be a core competency for a business. A leading example is Dropbox.
Dropbox enables fast and straightforward file sharing at an incredibly reasonable price, which delivers value to its customers. For less than $20 per month, business owners can access a wide range of digital solutions, including watermarking features, cloud storage, offline file access, and e-sign tools.
4. Amazon's Excellent Customer Service
No matter how robust and powerful an organization’s business intelligence system is, unparalleled customer service still stands out as a core competency in business.
In this regard, Amazon is considered the most omnipresent brand globally, with its massive success rooted in its excellent customer service. Offering a wide variety of products, Amazon’s strategy focuses on unwavering customer experience and satisfaction.
5. Target's Strategic & Successful Marketing
If a company can create a distinctive brand image and market it well, this can be its core competency. An interesting example of strategic and successful marketing as a core competency is Target.
Anywhere in the world, you can find department stores where you can purchase the items you need. Yet, Target stands out through its excellent brand marketing efforts.
From its employees’ uniforms to the iconic white bull terrier mascot, Target’s brand presence is unmistakable. Its familiar font, along with the consistent red and white motif, has grabbed the attention of both sellers and customers for decades.
6. McDonald's Formidable Buying Power & Size
This is a core competency only leading organizations can have. With McDonald’s enormous scale, it wields massive buying power that allows it to expand in the U.S. and globally and establish new franchises virtually anywhere.
Alongside buying power, its large-scale supply chain enables it to procure food at low prices and offer processed meals at highly competitive rates.
While these examples highlight the competencies of world-leading companies, small businesses too can identify their core competencies and create unique strengths to stand out.
How To Identify the Core Competencies in Your Business
To better identify your company’s core competencies, you can follow the steps below or turn to a business consulting firm. They can help you pinpoint your unique capabilities and create strategies on how to leverage them.
- Go Through Your Company’s Mission Statement
- Rethink the Unique Selling Proposition of Your Company
- Consider Your Existing Competencies
- Determine the Criteria for Your Core Competencies
- Identify the Areas of Work You Can Outsource
1. Go Through Your Company’s Mission Statement
Revisiting your business's mission and vision statement is a good starting point for identifying core competencies. By doing so, you’ll gain insight into what's important for your business and where it aims to go or accomplish. Use these statements to focus on the right set of core competencies for your business.
2. Rethink the Unique Selling Proposition of Your Company
Take some time to ponder why customers choose your company. Whether it's the quality of your products or the exceptional customer service you provide, these reasons give you a competitive edge in the market and shed light on the potential core competencies of your business.
3. Consider Your Existing Competencies
Alongside surveying the customers, make sure you monitor your employees, too. Find out if there is a common theme in the core competencies they identify. This gives you an idea of what your company does well and helps you identify existing core competencies.
4. Determine the Criteria for Your Core Competencies
There are three criteria your competencies must meet: it should be rare, difficult to imitate, and offer superior value. Compare each of your potential competencies against these criteria to establish a list of competitive core competencies.
5. Identify the Areas of Work You Can Outsource
Once you've identified your core competencies, it is time to focus on the areas that can be outsourced. Outsourcing frees up your employees' time, enabling them to better focus on strengthening these competencies in practice.
What Are Core Competencies in Business: Takeaways
So, what is a core competency in business? Core competencies are the unique abilities and resources that enable a business to create and deliver value to its customers. It is important to understand and utilize core competencies for informed and strategic decision-making.
If you're a small enterprise or startup that needs help defining your core competencies, small business consulting firms can be invaluable. These firms can help you identify and nurture your company’s strengths, so you can gain a competitive advantage in the market.
