What is the core competency of Apples

Routes to finance


Core competency is essentially what a company does well to distinguish it from other companies.

I admit that this is a very general core competence definition. However, a comprehensive definition is needed as the term becomes common usage and applies to businesses of all sizes. The original definition only applied to large companies.

The origin of the core competence

The concept of core competency emerged as a resource-based approach to corporate strategy; the concept was first proposed by C. K.

Prahalad and Gary Hamel introduced. In The Company's Core Competence (1990) they describe core competence as something that a company can do well and that fulfills three conditions:

1. It offers consumer benefits;
2. It is not easy for competitors to imitate;
3. It can be widely used to many products and markets.

Obviously, such a strict definition of core competency rules out small businesses, since most of them would not be able to meet the third condition.

A broader definition

Fortunately, the concept of core competency has evolved over time. However, all definitions include the concept of competitive advantage.

A more up-to-date definition of core competency would be "key skills or strengths that a company has developed that give it a competitive advantage over its competitors and contribute to its long-term success." Core competencies are difficult to duplicate for competing companies.

Note that the word "core" does not denote singularity; a company can have more than one core competence.

Examples of companies with strong core competencies

Walmart - Walmart is the largest retail chain in the world, with global sales of over $ 480 billion in 2015. The company has more than 11,000 stores worldwide. Walmart's core competencies include:

  • Massive purchasing power - Walmart's mantra is "everyday low prices". To make this easier, it uses its mammoth purchasing power to constantly pressure suppliers to cut wholesale costs.
  • Supply chain management - Walmart excels in all aspects of supply chain management. It has a huge network of distribution centers and has refined purchasing, operations, sales and integration into a highly efficient inventory management system, resulting in better stocking of products in stores and lower costs (which are passed on to consumers). Walmart was instrumental in developing the Universal Product Code (barcode) and was the first to implement it company-wide to collect and analyze data from individual stores.

Apple Inc. - Apple is the largest company in the world by market cap. In fact, if Apple were a country and its market cap converted to GDP, it would be the 20th largest country in the world. It employs over 100,000 people worldwide and had sales of $ 233 billion in 2015. Apple has very strong core competencies:

  • innovation - Apple has a long history of creating unique and innovative technology products, including the Mac computer. iPod, iPhone, iPad, Apple TV and the Apple Watch. Apple founders Steve Jobs and Steve Wozniak developed the Apple 1 in 1976 and developed the Apple Macintosh and other revolutionary tech devices. Even if it's not the first company to develop a new product, it's often the one that is able to take a new product, develop it in a unique way, and make it a huge commercial success (for example the release of the new product). The iPhone virtually wiped out Blackberry device sales in a matter of years.
  • Brand awareness - Fans of Apple products are usually very loyal to the brand. According to a 2014 study by Morgan Stanley Research, Apple's iPhone has a 90 percent brand retention rate over Samsung, LG, etc. It's not uncommon for consumers to show up by the hour or by the day for a new iPhone or other Apple product. Lots of crazy Apple fans buy every new version of the iPhone, even if their current model is less than a year old. Apple has a brand loyalty that the whole company envies.
  • marketing - Apple is a consistent winner of marketing excellence awards. Apple's marketing philosophy is about understanding customer needs and focusing on creating innovative but intuitive products and devices that work well with each other and constantly highlight the brand.

Also known as: Core competence, core competence.

Examples: A company can have all kinds of core competencies, such as a core competency in marketing, customer service, or human resources.