Core Competencies

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Organizations develop strategies to gain a competitive advantage. One way an organization establishes competitive advantage is through the use and development of core competencies. Core competencies are the value created activities that allows a company to achieve efficiency, quality, innovation, or customer responsiveness (Jones, 2010). Two specific core competencies that give an organization a competitive advantage are functional and organizational resources. Functional resources are simply the skills possessed by an organization’s functional personnel. These resources are so vital to an organization’s competitive advantage because they set the organization apart. These resources are usually unique, special and difficult to imitate. For example, the innovativeness of BMW sets it apart from other vehicles and makes it the ultimate driving machine. Organizational resources provide a competitive advantage in a different way. These are resources that are company-specific. Some these resources include skills of top management, land, capital reserves or even equipment (Jones, 2010). It can also include brand name and reputation which like functional competencies should be unique and difficult to imitate. Louis Vuitton for instance has built a reputation for its quality of clothing. The LV logo is also so known that brand name is enough alone to sell the product, thus giving it a competitive advantage.

Organizations also use different levels of strategy to create value. One of these strategies is functional-level strategy. This is a plan of action to strengthen an organization’s functional and organizational resources and create core competencies (Jones, 2010). Some examples of this include understanding the techniques of your rivals. This allows an organization to make the proper adjustments to be competitive. Another example would be investing in R&D, product design and marketing. This allows an organization to set its product and...
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