Core competencies are the main strengths or advantages of your business and the result of your specific skills and techniques. Writing your business plan can help you to identify your unique core competencies, and once you know what they are, they can help you to plan your business strategy, provide better value to customers, and expand into new markets.
What Are Core Competencies?
The main ideas about core competencies were introduced by C. K. Prahalad and Gary Hamel, who stated that core competencies fulfill three criteria:
They should provide access to a wide variety of markets
They should make a significant contribution to the perceived customer benefits of the end product
They should be difficult for competitors to imitate
Your core competencies may be based on your expert technical knowledge, years of experience in your niche, or a unique element of your product or service. They are the things that help you to be competitive in your marketplace. For example, one of Google’s core competencies is its expertise in search algorithms, while for Apple it’s product design, and John Lewis focuses on customer service. Your own core competencies will be strong cornerstones that you can build your business upon, but first you need to identify them.
How To Identify Your Core Competencies Using Your SWOT Analysis
Writing the SWOT analysis part of your business plan can help you to identify your core competencies. The SWOT analysis outlines the strengths, weaknesses, opportunities and threats to your business. You may have many strengths, but your core competencies are the ones that set you apart from everyone else and give you a competitive edge. So how do you identify these?
Start by listing your strengths, which may include strong branding, expert sales staff, the use of emerging technology, or anything else that is going to help your business succeed. Next, consider how those strengths measure up to Prahalad and Hamel’s three criteria listed above. Does this strength provide you with access to a wide variety of markets, does it benefit the customer, and is it difficult for competitors to imitate? Can the strength contribute to your long-term growth? If the answer to each of these questions is yes, then the strength in question may be one of your core competencies.
Your core competencies might not be immediately apparent when you’re just getting started, and Prahalad and Hamel suggest that they will develop over time and help your business to grow. In looking at your strengths you may identify gaps where you would like to develop your business – what would you like your core competencies to be, and what would benefit your customers? Work these into your business plan so you can plan how to make them happen, and identify what the benefits and implications will be for your business. What needs to change in order to facilitate the development of these skills?
Analysing Your Strengths
Digging a little deeper into your strengths can help you to find your core competencies. What are the causes of your strengths? For example, one of your strengths may be customer service, and you might attribute this to your excellent research into what your customers need. Your research skills would, therefore, be your core competency, and you could then consider how you could leverage this skill in other ways to bring new strengths to your business. For example, your research skills may also help you to develop new product ideas that your customers will love.
Developing Your Core Competencies
Your core competencies don’t have to stay the same forever, and you may find that over time you develop new skills that take your business in a new direction. It’s also important to continue to develop your existing skills because if your competitors improve in those same areas you could lose your competitive edge.
Need some help writing your SWOT analysis or any other aspect of your business plan? We can help you to write your plan so that you can identify and work on your core competencies, grow your business, and better serve your customers. Contact us online or call 01604 420 420 for more information.