What is distinctive competence?
What is distinctive competence?
Distinctive competence refers to some characteristic of a business that it does better than its competitors. Because the business is able to do something better than other businesses, that business has a competitive advantage over other businesses. Distinctive competence can occur in various areas, including technology, manufacturing, consumer relations, marketing, or the people that work for the business.
Companies with a distinctive competence are ones that have an advantage that is difficult for other businesses to copy. In order for a company to develop a distinctive competence, it must do a very thorough internal and external review of its corporate environments.
Companies must constantly be monitoring conditions in the business environment. Failure to do this could cause the company to lose their distinctive competence because of changes in the business environment.
There are a few examples of companies with a distinctive competency. GE has a distinctive competency in management development. Toyota has one in lean manufacturing.
A distinctive competence can give a business a big advantage over its competitors.
Distinctive competence refers to the core skills and practices that increase the competitiveness of an organization and make it different from its competitors. An organization's competitors cannot imitate this competence (at least in the short term), allowing an organization to gain an advantage over others. An organization must protect its distinctive competence to retain its competitive edge.
To determine its distinctive competence or competences, an organization should conduct an internal and external review and find those areas of skill and technology that are in demand in the marketplace. If these skills are not in demand, they are not areas of competence. An organization must also consistently change its distinctive competence in a changing business environment to keep its competitive edge, and its competence must become part of its corporate strategy. Examples of distinctive competence are fast delivery and the extremely high quality of an organization's product.
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.