Core Competence Analysis
Have you ever felt a bit overwhelmed when looking at the competition that already exists in your chosen market or markets? As a business owner or manager, it certainly can be intimidating to scan the market and see just how many qualified competitors already exist. In fact, you may feel at times that you should just give up on your business goals due to the amount of competition that is in place. After all, wouldn’t it make more sense to just look for a market with less competition? Not necessarily.
Competition can be seen both as a good and a bad thing in business. On the one hand, it can be hard to carve out your own niche in the market when you face stiff competition. However, on the other hand, the very presence of that competition means there is business that is worth fighting for in the first place. Your competitors are in business for the same reason you are, to make money, and they have obviously identified your market as one that has the possibility for profit. So, you can choose to see your competition as a positive sign of potential growth, rather than as an obstacle.
Of course, even with this positive outlook, you still have the problem of competition to get over. How are you going to ‘stand out from the crowd’? This is where core competence comes into play. What is it that you do better than your competition? How can you use that advantage to take home more of the market share for yourself and your business? When you identify and then properly exploit your core competencies as a business, you will be able to thrive well into the future.
You Must Be Relevant
One of the first things you need to understand about analyzing your core competencies is the fact that they need to be relevant to your customers in order to make a difference at the end of the day.
If the competencies that you count among your strengths within the business don’t actually have any impact on the customers you serve, they really aren’t going to help you rise above the competition.
For example, imagine that you consider office organization to be one of your biggest skills as a business. Everyone on your team works hard to keep everything organized behind the scenes, and your workplace always looks clean and tidy. That’s great – but it isn’t going to help you sell anything. That competency, while nice to have, is not a competitive advantage from the perspective of your customer. In fact, your customer is never even going to set foot in your offices, and they will never know (or need to know) this fact about your company. You are going to be evaluated on things that matter to the customer, such as the quality of your products and the prices that you offer, so those areas are where the competencies need to be found.
You Must Be Unique
Perhaps the most important part of a core competency is that it needs to be as unique and difficult to replicate as possible. In a competitive market, your competition is going to quickly recognize what it is you are doing that is allowing you to have success, and they are then going to imitate that element of your business as soon as they can.
However, if you have some form of proprietary information or process that keeps you one step ahead, your competitors might fail in their efforts to copy you.
As you might suspect, the competition is, inevitably, going to catch up. They will figure out what you have been doing, and how you have been doing it, and they will work on doing the same thing themselves. So, it is up to you to be continually improving and innovating your products and processes so you can stay ahead at all times. Think of this as establishing a moving target for your competition. Just when they think they have caught up to you, something new and innovating will roll off your line and you will be ahead once again.
You Must Identify Your Strengths Accurately
It is great to have core competencies that you can use over your competition, but you are only going to be able to leverage those into success if you can first identify exactly what they are and why they are important.
So, as a first step, you should sit down with key members of your team to brainstorm a list of competencies that you feel set your business apart from everyone else in the market. At first, feel free to include a wide range of points in this list, and then pare it down as you go until you are left with just a few essential strengths that lie at the heart of your business.
Again, it is always important to keep in mind that these points need to directly relate to your customers in one way or another. Generally, that means that a competency needs to either enable you to provide customers with a lower price, or a higher quality product. With few exceptions, those are the two points that customers care about most. If you can impress them with prices, or impress them with quality – or both – you stand a great chance of making a sale.
Analyzing the core competencies of your business is one of the most-useful ways you can spend your time as a manager. Everything you do from a marketing and promotions standpoint should be centered around these competencies, so you need to clearly identify them before moving forward. Businesses who don’t know exactly where they have an advantage over the competition are soon to find themselves at the bottom of the market. Work hard to pick out a few strong points that you feel can drive your business forward and then ride those all the way to success even in the most competitive marketplaces.
- A core competency can be defined as ‘a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace’.
- Core competencies should fulfil three criteria: Providing potential access to a wide variety of markets, make a significant contribution to the perceived customer benefits of the end product, and be difficult for competitors to imitate.
- Identifying and exploiting your own core competencies is a key management skill.
- Core competencies must be relevant to your customers, as well as being unique and difficult to replicate as possible.
- Everything you do from a marketing and promotions standpoint should be centered around these competencies, so you need to clearly identify them before moving forward.