7.3.2 Core Competences

Question 1

Core competences refer to a business’ ability to combine its skills, knowledge, and processes to provide it with an advantage over competitors, known as competitive advantage.

Answer 1

Competitive Advantage - A business’ combination of skills, knowledge and processes will often deliver a unique selling point which is difficult to imitate by competitors.

Question 2

Advantages and Disadvantages

Answer 2

Advantages - Core competences allow businesses to attract and retain customers, even in a competitive market. Core competences allow businesses to add value throughout their production process.

Disadvantages - Outsourcing products can lead to quality issues as some production processes are passed to third parties who may seek to cut costs during production at the expense of quality.

Question 3

Hamel & Prahalad (1990)

Answer 3

They argued that big businesses should be viewed as a collection of core competences (ability to do stuff), rather than a group of businesses or industries.