A core competence represents a basis for competitive advantage.True or false? Explain your answer.

Question

Quizplus · Accepted Answer

A core competence is a concept in management theory originally advocated by C.K. Prahalad and Gary Hamel. It refers to a company's most essential and distinctive set of skills, capabilities, or resources that gives the company an advantage in the marketplace. Core competences are what an organization does best; they are the source of a company's competitiveness and the point of differentiation from its competitors.
Core competences fulfill three criteria:
1. They provide potential access to a wide variety of markets.
2. They should make a significant contribution to the perceived customer benefits of the end product.
3. They should be difficult for competitors to imitate.
When a company identifies and nurtures its core competences, it can use them to produce value in ways that are unique and not easily replicated by competitors. This can lead to a sustainable competitive advantage, as the company can leverage these competences to innovate, improve its products and services, enter new markets, and perform better than competitors.
For example, a company like Toyota has a core competence in lean manufacturing and quality control, which has allowed it to become a leader in the automotive industry. Similarly, Apple's core competence in design and innovation has given it a competitive edge in the technology market.
In summary, core competences are fundamental to achieving competitive advantage because they enable a company to deliver unique value to customers, which is central to standing out in a crowded marketplace.

A Core Competence Represents a Basis for Competitive Advantage