Core competence

A core competence of a firm is a Competence which is valuable across different products and markets, unique and hard to imitate:

• Valuable
  • Customers have to be willing to pay for the value a core competence represents (lower costs or customer benefit)
• Unique
  • If a competence is not unique competition will drive down profits.
• Hard to imitate
  • A competence uniqueness is sustainable only if other firms have difficulties to replicate the competence:
    • Require tightly interlinked function within a firm
    • Causal ambiguity increases barriers to imitation. This is if the roots of the competence are hard to understand
• Valuable across different products or markets

Part of M8-S2 - Reading - Strategies for E-Business - Chapter 4 - Internal Analysis

See also: M6-S3 - Reading - Prahalad, C.K. The core competence of the corporation M6-S4 - Session notes