Question

Define and explain why the concept of Core Competencies is important? Provide examples of organizational resources and capabilities that CANNOT be Core Competencies.

Answer 1

Core competences is important because it is a concept in management theory, introduced by C K Prahalad and Gary Hamel. It can be defined as "a harmonious combination of the many resources and skills that divide a company in the market" and thus the basis of the firm's competitiveness.
The main competencies meet three criteria:

Provides access to many markets.
It must make a significant contribution to the perceived benefits of the final product.
Hard to emulate an opponent.

For example, a company’s core capabilities may include mechanical, precision, optics, and microelectronics. They help create cameras, but it can also be useful to create other products that require these capabilities.
Utilizing and understanding the concept of core competency can be very important for a business. They can use core capabilities to get good results from core products. Businesses can also use core capabilities to increase customer and stakeholder value.

Alexander and Martin emphasize that the company's competitiveness is based on its ability to develop core competencies. The main competencies are, for example, technical knowledge or specialized skills. A key competency is management ability to develop beyond core competencies, core products and new businesses. Thus, capacity building is the result of a strategic architecture that must be implemented by senior management to use its capabilities.