Core competency means that an individual or a company has a strong basis from which to gain additional ability to do so a specific job.it is a fundamental knowledge ability in a specific subject area or skill set.it is something that a firm can do well and it should provide consumer benefit and it is not easy for competitor to imitate though it provides competitive advantage. While cost savings is important to every company, it is no longer the only driving force in an outsourcing decision. Companies today need to take a broader view of outsourcing by isolating their core competencies, and then chipping away at all the functions that do not contribute to them. When a company starts evaluating their activities for outsourcing potential, any products or processes ...view middle of the document...
Decision to form relationship:
When the decision relates to using an external provider of product or service the question arises whether or not the provider’s service will be needed. If firm has the ability to have a core competency than careful assessment is needed for making relationship either the firm wants it or not.
What does it take to have the core competency?
Core competencies are developed through the process of continuous improvements over the period of time. To succeed in an emerging global market it is more important and required to build core competencies rather than vertical integration. . Companies today need to take a broader view of outsourcing by isolating their core competencies, and then chipping away at all the functions that do not contribute to them.
The core competencies are achieve by the special expertise,knowledge,know how that distinguish the firm from the other. If your competitors have equivalent expertise, then this is not a core competence.
In order to be competitive an organization needs tangible resources but intangible resources like core competences are difficult and challenging to achieve. It is even critical to manage and enhance the competences with reference to industry changes and their future. For example, Microsoft has expertise in many IT based innovations where for a variety of reasons it is difficult for competitors to replicate Microsoft's core competences.
In a race to achieve cost cutting, quality and productivity most of the executives do not spend their time to develop a corporate view of the future because this exercise demands high intellectual energy and commitment. The difficult questions may challenge their own ability to view the future opportunities but an attempt to find their answers will lead towards organizational benefits.