The Impact of Core Competencies on Competitive Advantage - Essay

Topics: Strategic management, Management, Core competency Pages: 6 (1806 words) Published: December 2, 2012
The Impact of Core Competencies on
Competitive Advantage
1. Introduction
Companies need to learn to manage tomorrow's opportunities as competently as they manage today's businesses. The discovery of new competitive space is helped when a company has a class of technology generalists that can move from one discipline to another. The new market development can be geared up by developing the capability to redeploy the human resources quickly from one business opportunity to another. It is the top management's responsibility to inspire the organization with a view of distinct goals and help them to achieve and reach the set target. Building core competence becomes essential to competitive advantage building. The organizations need to build its strategies within different clear scenarios, in different ways, based on different competencies for the purposes of achieving real advantages in the shadow of unknown, risk, and uncertain future. Therefore, The ultimate purpose of this study is to investigate the impact of core competencies on competitive advantage.

2. Core Competence
Much of the research on competitive advantage focused on core competencies as a major source of that advantage, core competencies include the particular set of skills and resources affirm possesses as well as the way those resources are used to produce outcomes. The concept of core competence, as fundamental to organizational renewal and as a driving force behind strategic change, interests both managers and scholars. It is a complex and challenging concept: it is difficult to specify theoretically, to identify empirically as a phenomenon, and to apply in practice. Scholars have recently recognized these problems in general conceptual discussions and in core competence-specific empirical research. Competencies are commonly agreed to reside in individuals and teams of individuals, implying that the competence concept involves a cumulative hierarchy. This cumulative hierarchy notion is evident in many streams of research concerning the associated concepts: i.e. single-, double-, and triple-loop learning, which are based on competencies, capabilities, and dynamic capabilities, respectively, according to Savory. Another researcher has adopted similar notions of hierarchy: i.e. first-order competence, which comprises customer and technological competencies; integrative competence, which is the ability to combine the previous competencies; and second-order competence, which is the ability to create first-order competencies. Scholars also distinguish between “distinctive competence” and “core distinctive competence”. The two competencies involve a hierarchy: the former is a particular strength within a company that is difficult to imitate and may be used to generate sustainable profits; the latter are competencies “that primarily drive the aspirations system”. A final example of a hierarchy involves three competence categories: distinctive competencies, which are the most important in a company; necessary competencies, which do not differ from those of competitors but which are needed for operational reasons; and protected competencies, which can hurt the company if misused. The first two examples can be assumed to involve qualitative hierarchy in terms of differences in importance. Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value. Core competencies are the collective learning in organizations, and involve how to coordinate diverse production skills and integrate multiple streams of technologies. It is communication, an involvement and a deep commitment to working across organizational boundaries. Few companies are likely to build world leadership in more than five or six fundamental competencies. Hamel and Prahalad define core competence as a bundle of skills and technologies that enable a company to provide a particular benefit to...
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