Differentiate between core competence and distinctive competence - Strategic Management and Business Policy

Differentiate between core competence and distinctive competence - Strategic Management and Business Policy

Core Competencies:

· Core competence gives a company its competitive advantage by enabling it to deliver value to its customers. Changing core competence requires key skills and abilities in a new job or field of operations.
· Core competence of a company is one

of its special or unique internal competences. Core competence is not just a single strength or skill or capability of a company; it is ‘interwoven resources, technology and skill’ or synergy culminating into a special or core competence.

· Core competence gives a company a clear competitive advantage over its competitors.

· Example: 

Xerox’s core competence is in photocopying; Canon’s core competence lies in optics, imaging and laser control; Honda’s core competence is in engines (for cars and motorcycles)
· To achieve core competence, a particular competence level of a company should satisfy three criteria:
o It should relate to an activity or process that inherently underlies the value in the product or service as perceived by the customer.
o It should lead to a level of performance in a product or process which is significantly better than those of competitors. Benchmarking is a good way and is generally recommended for undertaking performance standard.
o It should be robust, i.e., difficult for competitors to imitate.

Distinctive Competencies

· Distinctive competence is based on the assumption that there are different alternative ways to secure competitive advantage and not only special technical and production expertise as emphasized by core competence.
· Distinctive competence includes core competence as one of the alternatives.
· The focus in distinctive competence is on exploiting a market opportunity. And, depending on the market or competitive situation, one or some of the alternative competences may work

 

Example: 

Product or process superiority (core competence), product differentiation (situational or adaptability), cost effectiveness or cost efficiency to support a price strategy, special capability in marketing or distribution, etc. Under given circumstances, one of these, or a combination of some of these, will produce a distinctive competence which would be appropriate or best suited to exploit the opportunity and produce desired results.