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Distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitors and which gives it an advantage over them. Distinctive competence can lie in different area such as technology, marketing activities, or management capability.
A company needs to develop its strategy that utilizes its distinctive competence to gain competitive advantage. It must be remembered that what distinctive competence of a firm may change with time as other companies develop new capabilities and with change in market requirements. Therefore companies need to identify their distinctive competence by careful analysis, and if required, strive to develop new competences to meet changing market requirements and competitive situation.
The concept of distinctive competence was first put forward by Philip Sleznick in 1957. Kenneth R Andrews further elaborated it in 1971.
The concept of distinctive competence is quite similar to the concept of core competence. While some authors consider these two term to mean the same thing, as per authors like C.K. Prahlad core competences must satisfy two additional criteria. One, it must be difficult to copy or replicate by competitors. Second, it should provide competitive advantage for multiple products and multiple markets.
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