In the short run, a firm’s competitiveness derives from pricing or application attributes of the products but in the long run, a firm’s competitiveness derives from its ability to develop and grow at low cost and at a faster pace than its competitors. The most important point about competitive advantage is that management must be able to integrate corporate wide technologies and processes into competencies that provide a solid ground to the individual business so that it could adopt quickly to the ever changing opportunities. Core competence has been regarded as an effective way to help the organisation in the task of restructuring its products, markets, management, organisational setup and technology in the complex and dynamic environment.
- A core competence is one that provides access to various markets. For example, a firm can operate as a monopolist in one business and can operate in a monopolistic competitive market at the same time in other business.
- A core competence should make a significant contribution to the perceived customer the benefits of the end product.
- A core competence should be difficult for competitors to initiate. For instance, a firm entering a monopoly market may acquire some of the processes that comprise core competency but it will not be easier to duplicate monopolist’s pattern of internal coordination.
In any market, sustainable competitive advantage plays a major role and core competencies are nurtured so as to meet the turbulent environment and improve and grow by grabbing the right opportunity at the right time.
Apart from core competence, the possible strategic alternative to have sustainable competitive advantage for different market structures are as follows:
Monopoly– Stability is the best strategic alternative. For strengthening the position, vertical integration (either forward or backward) will be most effective. If any competitor enters, mergers and acquisitions may be the appropriate option.
Perfect Competition- The firm should not go for advertising or price differentiation. Concentration strategy will improve the economics of scale and firm’s sustainable competitive advantage will increase.
Monopolistic Competition- Advertising, quality control and branding are the appropriate measures. Strategic alliances with respect to price may work. Differentiation strategy may work. Diversification strategy may further enhance the competitive strength.