The discussion about the difference between core competencies and distinctive competencies needs a clarification of what a firm’s competencies are. Competency relates to anything that a firm does well. For example, take a firm that is really keen on reducing defects of the production process. Then, maintaining a relatively low rate of defects per hundred units of production can be a competence. Therefore, this is known as competency. A core competency relates to anything that is central to the core of the business. Continuing the above example, this reduction of defects per hundred units of production may be concerned as the primary source of business success. In this scenario, low defects of hundred unit of production become a core competence because this is one of the central themes of business success. Whereas, a distinctive competency relates to a competency that is really differentiating a business from other competitive business. It is noted that, a core competency can also be a distinctive competency only if a core competency facilitates competitive advantage. A core competency that is not facilitating a company’s competitive advantage will not be considered as a distinctive competency.
What is a Core Competency?
As mentioned above, a core competency is a competency that is central to the core of the business. Mostly, companies at present develop core competency as means of developing a stable business. This stableness is achieved as a result of core competencies because it depicts the central theme and the core strength of the business. Most practitioners agree to the fact that core competencies flow hand in hand with the company business model. Also developing a core competency based on the core of the business is important. For example, for a consultancy company, intellectuals are determined as the business depends on their capacity. For a manufacturing company, development of core competency in the manufacturing process is important as the company depends on the effectiveness of the manufacturing process.
In the literature, core competency was conceptualized by many scholars. Recently, Ljungquist (2007) proposed that, core competency comprises of three attributes. They are competencies, capabilities, and resources. Also, he stated that a company that satisfies three criteria is presumed to hold core competencies. These criteria says that a core competency must be able to provide some value to the customers in terms of a product or a service; core competency should hold the characteristic of uniqueness and core competencies should provide access to different market segments.
Making products with minimum damages can be a core competency
What is a Distinctive Competency?
Attaining competitive advantages are very important for companies at present provided the intense competitive business environment. Regardless of the industry, this competitiveness exists. Therefore, a company that rises above the other relative competitors is presumed to hold advantages. Theoretically, this premise is known as competitive advantages. Achieving competitive advantages is primarily achieved by means of possessing distinctive competencies. As the term implies, ‘distinctive’ competencies highlights the characteristic of ‘uniqueness.’ The notion of distinctive competencies is relatively easy to identify. This means that a core competency that facilitates to attain competitive advantages for a firm is considered as possessing distinctive competencies. Therefore, a core competency can only be considered as a distinctive competency only if a competitive advantage is achieved. Therefore, a core competency is not a distinctive competency always.
In the real world, companies have gained competitive advantages by possessing distinctive competencies. A company like Rolls-Royce holds a unique manufacturing process of automobiles which no other automobile manufacturer possess. Some supermarket chains and logistics companies employ unique types of supply chain management strategies and thereby attain competitive advantages over their competitors. These types of examples say that uniqueness is one of the prime concerns of distinctive competencies.
Rolls-Royce company has a distinctive competency
What is the difference between Core Competencies and Distinctive Competencies?
• Definitions:
• The term competency relates to anything that a firm does well.
• A core competency relates to anything that is central to the core of the business.
• A distinctive competency is a quality that differentiates a company from its competitors.
• Connection:
• A core competency can also be a distinctive competency only if a core competency facilitates competitive advantage.
• Not all the core competencies facilitate distinctive competencies.
References:
- Ljungquist, U. (2007). Core competency beyond identification: presentation of a model. Management Decision, 45(3), 393-402.
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