Discuss how strategic leaders make sure that the firm maximizes its core competencies
Core competencies are “capabilities that serve as a source of competitive advantage for a firm over its rivals” (Hitt, Ireland and Hoskisson, 2017, p. 89). There are two tools that help firms identify a company’s core competencies. The first tool consists of four criteria that could be used to determine which capabilities are core competencies. The four criteria to assess capabilities are if they are valuable, rare, costly to imitate and non-substitutable. The second tool that help a firm identify its core competencies is the value-chain analysis. Firms use this tool to select those value-creating competencies that could be maintained, upgraded or developed. Determinations could also be made on which competencies should be outsourced. According to Aung and Heeler (2001) key competencies can include “nurturing, empowerment, operating, data management, new service development, alliancing, communication, and market sensing.” Core competencies are the resources of an organization. The firm has tangible and intangible resources that it can draw on to be strategic and competitive. Leaders should be proactive when using the resources available to maximize the firm’s core competencies. Aung and Heller (2001) assert that competencies are “areas where an organization must excel in order to maintain leadership.” Leaders in a firm must be knowledgeable about the core competencies and capabilities within their organization. They must know the strengths and weaknesses of the organization and have knowledge of the competition. They must be aware of the internal and external environments. Leaders should be focused and organized when planning strategic moves.
Prompt: Strategic leaders must make sure that the firm maximizes its core competencies. Discuss how strategic leaders can achieve this task.