Business policy and strategy - Core Competencies

Core competencies are very similar to the "strengths" of a business as reflected in a SWOT Analysis. Core competencies are the things that are unique to a business which can create strategic advantage. #alevelbusiness #businessrevision #aqabusiness #tutor2ubusiness #alevels #edexcelbusiness #businessalevel VIDEO CHAPTERS 0:00 Introduction 0:08 What are "Core Competencies"? 0:42 Developed by Prahalad & Hamel 1:21 Core Competencies & Strengths in SWOT Analysis 1:49 Core Competencies Explained 2:44 Examples of Core Competencies 4:43 Is It a Core Competence? The Three Key Conditions 6:44 What Prahalad & Hamel Suggested Businesses Should Do 7:02 Criticism of Core Competencies Approach VIDEO SUMMARY This video is about core competencies, a strategic concept used in business strategy. The video starts by explaining what core competencies are. A core competency is something fundamental and a skill or ability that a business has that enables it to compete effectively. It is a strategic concept around business strengths. Two business management theorists, Hamel and Prahalad, first suggested the idea of core competencies. They argued that the key to competing in the future is for management teams to build, deploy, protect, and defend their core competencies. Core competencies are linked to another important management tool called SWOT analysis, specifically the strengths section of the analysis. The video then discusses four ways that a competence can be core to a business. The first way is through collective learning or expertise within the business. The second way is through the ability of a business to bring together a host of different skills and technologies to create something unique. The third way is by enabling a business to differentiate itself from the competition. The last way is that a core competence can be leveraged widely to support many different products and enable the business to compete in different markets. Four examples of businesses with core competencies are Ikea, Apple, Domino's, and Starbucks. Ikea's core competency is its unique organizational culture based on thrift, low cost, and phenomenal design capabilities. Apple's core competency is its focus on design, particularly user-centered design, and its ability to integrate software and devices. Domino's core competency is its ability to integrate all of its systems to enable easy ordering and on-time delivery. Starbucks' core competency is its ability to localize the coffee shop experience to meet customer needs in different countries. The video then goes on to discuss three conditions that need to be met for something to be considered a core competency. The first condition is that it must provide distinctive consumer benefits. The second condition is that it must be hard for competitors to imitate. The third condition is that it needs to be something that can be leveraged widely to support many different products and enable the business to compete in different markets. The video concludes by mentioning some criticisms of the core competency model. The first criticism is that some businesses outsourced too many non-core activities, which led to a loss of competitiveness. The second criticism is that it can be difficult to find core competencies that are truly unique to a business. The third criticism is that focusing too much on core competencies can lead to complacency and businesses may forget to invest in other competencies that may become more important in the future.