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You see it everywhere in magazine articles and advertisements but what exactly is a core competence At its simplest a core competence is a unique capability that affords some type of competitive advantage It corresponds to a business process and involves underlying skills functions systems and knowledge To determine if something is of core competence one must ask Does this thing give the company a unique advantage over its competitors and help make the company profitable Capabilities on the other hand refer to a firm s skill at effectively coordinating its resources In other words resources are the source of a firms capability and capabilities refer to a firm s ability to bring these resources together and to deploy them advantageously Every organization possesses many capabilities that enable it to perform the activities necessary to provide its products or services Some of these activities may simply be performed adequately while others may actually be performed rather poorly However successful organizations conceivably possess certain capabilities allowing them to perform key activities exceptionally well Moreover these are the distinctive capabilities that support a market position that is valuable and difficult to imitate At Wal-Mart its major competitive core competence is its superior logistics system Wal-Mart is one of the biggest global retailers in the world operating in several different countries around the world with multiple formats all tied together by a state-of-the-art retail distribution system known as a Retail Link No other mass retailer or trading community - domestic foreign or global - has developed a system even close to Wal-Marts capabilities in supply chain and distribution management and optimization However the possibility of competitors having allocated significant resources to developing state-of-the-art data warehouses that like Wal-Marts goes beyond collecting point-of-sale data to drive replenishment exist In looking at Wal-Mart more closely one realizes that since Wal-Mart is a traditional company its core competence is its supply chain Wal-Mart maintains a win-win situation with its suppliers since
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