What Are Business Core Competencies? (With Various Types)
By Indeed Editorial Team
Published July 24, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Core competencies are necessary for any business to control a portion of the market share and stay relevant in the industry. They're similar to personal competencies, which help a job candidate increase their resume's appeal to a hiring manager and get a job offer. Understanding core competencies for a business teaches you their usefulness and how to identify them. In this article, we answer "What are business core competencies?", list various types, and highlight tips to identify them.
What are business core competencies?
Knowing the answer to “What are business core competencies?” can help you prepare yourself for a job interview and align your goals with those of a company. Business core competencies are a business's resources, qualities, and capabilities, which give it a strategic competitive advantage over other businesses in the same industry.
They're similar to personal core competencies, such as analytical skills, creativity, and problem-solving, which a candidate for a job position uses to gain a competitive advantage during recruitment. Core competencies are an important aspect of a business's value to long- and short-term customers. They assist a business in growing a strong market reputation, which can help it obtain new customers and keep its current ones. These competencies can comprise products, services, skills, and equipment.
Types of core competencies for a business
Below are various core competencies types that a company uses to attract customers and make profits:
Customer service is the quality of interaction between a customer and a business before, during, and after a transaction. It's essential for building customer loyalty, which helps increase a business's chances of success. Companies often utilize various methods to help ensure positive customer service. They may hire and train qualified customer service representatives, automate manual processes for speed and reliability, and personalize products and services for various customer segments.
Quality control is a set of processes or procedures a business follows to ensure that they maintain a specific standard for a product or service. Typically, a standards organization sets this benchmark, and businesses attempt to follow them by refining their processes, testing products for significant variations, and training personnel. Besides externally set standards, many organizations also have a quality assurance team or department that can develop standards to help ensure that their products differ from similar products in the marketplace.
Innovative businesses regularly introduce new ideas that help them improve processes, workflows, and methodologies. Innovation can also help a company create a new product, improve an existing one, or develop new business models. Being innovative enables companies to adapt to industry changes, stay relevant, and differentiate themselves from their competitors. The concept of innovation generally applies to the various aspects of the company, including marketing, network, and management.
Advertising and marketing are two important areas where businesses often attempt to gain an advantage over their competitors. Businesses with competent marketing, advertising strategies, and resources may record a significant increase in the sales of their products or services. Advertising is an aspect of marketing, and it's often a short-term endeavour to promote or sell a product or service. Marketing is a business's overall approach to communicating with its customers. Companies use different online and physical channels to communicate with their customers, and they have various metrics that help them measure the impact of their efforts.
For a business, flexibility refers to its ability to adapt to changing circumstances that may potentially affect its sustainability. It promotes profitability and helps ensure employee satisfaction. There are two types of business flexibility, including employer and employee flexibility. Employer flexibility is when a company's management gives employees enough freedom to perform their duties. Companies usually do this by enabling them to choose their schedules, dress code, and projects. Employee flexibility refers to how employees adapt to their roles based on the company's needs, such as adjusting work hours or closing late from work due to helping a colleague.
Standardization is when an organization sets protocols that enable it to create quality products consistently or deliver quality services. When there's uniformity in the consistent production of quality goods, the organization may notice an expansion in its customer base. A business can derive other benefits from standardization, including increased productivity, improved customer service delivery, and reduced operational costs.
Buying power means the amount of money a business has to purchase assets and securities. For example, suppose a company decides to expand its operations from one province or territory to another. Here, it requires sufficient capital to rent an office, equip and furnish it, and hire and pay new employees. Buying power is what enables it to achieve these goals. A business with high buying power may also decide to open branches outside its original country and benefit from the economic opportunities these two markets offer.
Product mix or product assortment is the total number of products a business offers to its customers. It typically consists of product lines, which are product categories that consumers use together. Developing a successful product mix strategy enables a business to leverage its product lines with the largest potential for growth to increase its market share and revenue. It enables companies to understand the need of diverse customers and ensure their satisfaction.
Various businesses have also adopted corporate social responsibility (CSR) as an advantage-gaining technique. CSR is a form of self-regulation that shows business commitment to improving and contributing to the well-being of communities. While companies typically engage in CSR through environmental initiatives, charity work, ethical labour processes, and volunteer projects, the benefits they derive from it often exceed the improvement in the community. For instance, CSR can improve a brand's awareness and public perception, which can help them attract customers. It also helps them reduce employee turnover and increases their appeal to investors.
Tips on how to identify a business's core competencies
The tips below highlight how you can identify the core competencies of a business:
Read their vision and mission statements
A company's vision and mission statements generally highlight its goal and the objectives to achieve that goal. These statements clarify why the business started operations and reflect a summary of its core values. As these values typically guide its operations, you may get a minor understanding of its core competencies.
Understand their clients and customers
It's beneficial for you to understand the company's main customers and why they chose the company. That reason may give you insights into aspects of the business's core competencies. For example, if you notice that a company's products have consumers among the young, old, and physically disabled public, then one of its core competencies may be inclusivity.
Review their current core competencies
An employer typically reviews what their current areas of competencies are by discussing the subject with their employees after understanding customers' opinions of the business. They compare the perspectives of the employees and the customers with theirs to see if they overlap. These overlaps are typically the consensus the employer regards as the company's actual competencies.
Compare reviewed competencies with the competency criteria
For a business activity to be a core competency, there are three criteria for it to pass, including:
Provides superior benefit or value to customers
Competitors can't imitate or replicate it
From the list of competencies you have, check that each meets all these criteria. If an activity doesn't meet these criteria, it may differ from a core competency.
Understand when they outsource
Rather than having numerous core competencies, businesses typically choose where they have the most competitive advantage and focus there. They outsource activities with less competitive advantages to save costs and improve production. For instance, vehicles and computer manufacturing companies typically outsource the manufacturing of their products to external companies. That enables them to reduce development and production costs while increasing production units.
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