firm's core competencies

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// This paper discusses the importance of a core competency in the organization. It discusses the reasons for the change in the core competency of the organization. The core competency is based on the new market that needs to be focused upon //.

Relevance of a firm's Core Competencies to Strategic Management:

C.K Prahalad and Gary Hamel coined the term 'core competencies' in the article 'The Core Competency Of the Corporation'. Core competency is an intangible asset of a company. The firm tries to promote, harmonize and develop resources and capabilities to create value and competitive advantage. The core competency of a firm depends upon the communication and deep commitment among the members of the organization. The core competencies reside in the firm. The firm has to develop products, technology and business units around the core competency. The core competency is unique to a firm. It is difficult to imitate, and it helps to differentiate it from the products of other firms. It helps the organization to run effectively.

The core competencies show the dynamic capability of the organization to develop management capacities. It helps to develop combinations of organizational, functional, technological processes that cannot be imitated by the competitors. The competitive advantage is gained through capturing entrepreneurial rents. Core competency is strategic strength of an organization. The company should know the underlying skills, abilities, knowledge, technology or processes to provide a unique set of operations. In order to ...