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competencythe particular, often unique, abilities possessed by a firm in supplying a product which provides the basis for the firm's on-going COMPETITIVE ADVANTAGES over rival suppliers. At an individual level, core competencies are the key skills and knowledge required in a job (see RECRUITMENT AND SELECTION). Such skills may reside, for example, in the firm's research and development or marketing capabilities. Essentially they embody the expertise of the firm's incumbent staff, accumulated know-how and intellectual property rights (PATENTS).
From a strategic perspective, the possession of core skills suggests that firms should concentrate on what they do best (that is, ‘stick to the knitting’) rather than be tempted to diversify (see DIVERSIFICATION) into areas they know little about or dissipate their energies by trying to do too many things. See CORE BUSINESS, RESOURCE BASED THEORY OF THE FIRM, DISTINCTIVE CAPABILITIES, VALUE CHAIN ANALYSIS.