Question

Subject: Innovation and technology management

Successful businesses outperform their competitors due to some advantages that make them successful. Businesses also remain profitable due to their core competence. Discuss the concepts ‘competitive advantage’ and ‘core competence’.

Answer 1

Discuss the concepts ‘competitive advantage’ and ‘core competence’.

First know, what is Competitve advantage?

There are many factors that can be rightly referred to as competitive advantages. Everything from greater profits, cheaper production through outsourcing labor, to brand prestige can fall under this definition. A company will have a competitive advantage when it finds itself in a position that makes it superior to its rivals in the market.

What is Core competence?

Firstly the company must be able to provide potential access to a wide variety of markets. The skills and technologies developed by the company must be such that the company is able to diversify its products according to the needs and changes in the market. Secondly, the company should make a significant contribution to the perceived customer benefits of the end product. At all times, the needs of the customer and the necessity of making the product visibly unique and superior to them should be kept in mind. And thirdly, it must be difficult for competitors to imitate. Uniqueness is a fundamental necessity to achieve core competence because if the company’s product can be reproduced with ease, they will continue to lose customers to their rivals.

In this given figure you can see 4 dimension of the core competence by which all strategies must be decided after taking into account these strengths in order to make the work of the company more structured.

These are main differences between Competitve advantages and Core competence.

1. A competitive advantage is gained when a company achieves a favorable position in terms of quality, profits, etc. over its rivals.

2. Core competence is a particular set of skills or knowledge that is unique to a company.

3. Rivals can also adopt the same methods to achieve a competitive advantage so it is only a short term measure to gain success.

4. A company’s core competence is marked by its uniqueness and is difficult to imitate so it is a long term measure to gain success.

5. Core competencies can be used to create sustained competitive advantage.