Question

The concept that core competencies must be sustainable for firms to earn above average returns is well established. However, core competencies can be threatened or even become obsolete. Explain how firms can strengthen and protect their core competencies. 400 words

Answer 1

Core competencies are the capabilities that provide a first mover advantage to the firm over its competitors. It helps the companies to stand out among its competitors by providing valuable services to its customers. If a firm want to excel, it is important for it to explore and cultivate its core competencies.

The core competencies must include the following characteristics:

• The activities must help the customers to enjoy the utmost benefits.
• The competitors must not be able to replicate such core competencies.
• They must be innovative and extraordinary.

The core competencies can be strengthened by:

• The companies can focus on expanding its customer’s base and to retaining its customers by providing valuable aftersales services.
• The firms should consistently work towards growth, development and progress to protect itself from following business practices that have become obsolete.
• The organizations ought to make a hierarchical guide which defines objective on how to strengthen core competencies.
• The firms can concentrate on setting benchmarks for its business process with respect to their competitors. The competitors can act as a driving force for the firm to work on improving its core competencies.
• The firms can prioritize on taking up profitable and valuable (core) exercises and outsourcing the activities that are non-core in nature.
• The firm can work on the growth and development of its human resources as they are the one responsible for the functioning of any organization. The firm can hire pool talented people and can work further on polishing their skills through training and development.