According to C.K. Prahalad and Gary Hamel, major core competencies are identified in three areas —
Memory Code: CCM
Competitors-Competitor differentiation
Customers -Customer value
Market-Application to other markets
- Competitor differentiation- Apple Product is one of the main three conditions. The company can consider having a core competence, if the competence is unique and it is difficult for competitors to imitate. This can provide a company an edge compared to competitors. It allows the company to provide better products or services which cannot be copied by any competitors on earth. The company has to keep on improving these skills in order to sustain its competitive position. Competence does not necessarily have to exist within one company in order to define as core competence. Although all companies operating in the same market would have the equal skills and resources, if one company can perform this significantly better; the company has obtained a core competence.
- Customer value- The second condition to be met is customer value. When purchasing a product or service it has to deliver a fundamental benefit for the end customer in order to be a core competence. It will include all the skills needed to provide fundamental benefits. The service or the product has to have real impact on the customer as the reason to choose to purchase them. If customer has chosen the company without this impact, the competence is not a core competence and it will not affect the company’ market position.
- Market- Application to other markets- Application of competencies to other market-The last condition refers to application of competencies to other markets. Core competence must be applicable to the whole organization; it cannot be only one particular skill or specified area of expertise. Therefore, although some special capability would be essential or crucial for the success of business activity, it will not be considered as core competence, if it is not fundamental from the whole organization’s point of view.
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