Core competence for sustainable competitive advantage: A structured methodology for identifying core competence

Abstract

Core competencies are the crown jewels of a company and, therefore, should be carefully nurtured and developed. Companies can determine their future business directions based on the strengths of competencies. However, because generalized terms such as resource, asset, capability, and competence are not clearly explained in connection with competence theory, these posing difficulties in understanding many contemporary management concepts. In this paper, we provide a summary of the recent management theories by comparing their salient features. We then propose a linking mechanism between assets, resources, capabilities, competencies, and core competencies. We provide a methodology to identify core competencies by isolating unique and flexible capabilities of the firm. We use this framework to identify the core competencies of a U.K. manufacturing company. The results of our analyses is to help the company to make more informed strategic management decision regarding capability development, outsourcing, focusing, or diversification, with regards to new products, services, or markets. The framework is generic in nature and is applicable to benchmark a manufacturing, public, or service sector organization.