why core competencies are important
core competencies allow a company to better understand how to allocate its resources for example it may make sense for a company to outsource certain tasks if it does not care to develop those tasks into company strengths this also includes stronger direction on the staff to hire and what training to incur core competencies also reduce a company s market risk by being exceptional or proficient in specific areas a company can rely on these areas to maintain consistency and reliability in operations for example companies with strong internal cultures will experience less employee turnover training expenses product deficiencies due to lack of knowledge or unhappy workers as companies determine what they are best at customers may often recognize and associate the company with that core competency therefore core competencies help a company develop a stronger brand image or market presence for example many consumers associate apple products with being the most cutting edge and innovative last core competencies may help create stronger relationships between a company and its employees or customers both employees and customers may associate with a company better knowing its strength or identity in the example above employees may take pride in creating the most innovative products while customers gain satisfaction knowing they possess the most creative solutions some core competencies do expire consider sears long term dominance as the major retailor due to their catalog now that core competency has faded and an in home printed catalog may no longer be viewed as a strength 2advantages and disadvantages of core competenciescore competencies are difficult to imitate it often takes a long period of time or large sums of capital to develop core competencies once a company has achieved a core competency it often has a major advantage over its competitors in the marketplace core competencies may also be transferrable across different industries or product lines for example with a platform of being an incredibly innovative company apple has expanded into new product lines different sectors and varying geographical regions an advantage of a company may be able to be applied widely last core competencies naturally enhance the marketability of a product spirit airlines core competency of offering the cheapest flights on average is not only its strength it doubles as a company slogan though this may mean some consumers are naturally adverse to the company it also means spirit s brand image is clearly defined and recognizable just as difficult as a core competency is to create it may be equally as difficult to change this may inadvertently cause the company s brand image to falter and be confusing for example mcdonald s was once known for indoor playgrounds and ronald mcdonald though the company has shifted away from this culture long time consumers may still associate the brand with old core competencies core competencies also naturally limit the flexibility of a company consider a low price retailer such as wal mart the company may struggle to launch high end more expensive product lines with greater margins because consumers may not appropriately associate the product with the company a company may also lose the forest among the trees if it gives too much attention to developing a core competency the ultimate goal of a company is not to possess core competencies its purpose is to generate revenue through the sale of products therefore companies may spend tremendous amounts of time or capital without an overarching strategy that makes sense 