Core competency

A core competency is a concept in management theory introduced by C. K. Prahalad and Gary Hamel. It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace" and therefore is the foundation of companies' competitiveness.

Core competencies fulfill three criteria:

  1. Can be leveraged to define new opportunities and provides potential access to a wide variety of markets.
  2. Should make a significant contribution to the perceived customer benefits of the end product or service.
  3. Difficult to imitate by competitors and provides sustainable competitive advantage.

For example, a company's core competencies may include precision mechanics, fine optics, and micro-electronics. These help it build cameras, but may also be useful in making other products that require these competencies.

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