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Updated Oct 20, 2023

What Are Core Competencies for Business?

What strategic advantages does your business have over the competition? Find out what core competencies are and how to identify them.

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Max Freedman, Business Operations Insider and Senior Analyst
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Editor Reviewed
This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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No two businesses are alike, but some are less alike than others. The more ways your company stands out from its competitors, the more likely your business is to attract customers. These distinguishing qualities are related to core competencies, and when you correctly identify and act upon these features, your business can thrive.

What are core competencies?

Core competencies are the defining products, services, skills and capabilities that give a business advantages over its competitors. In other words, business core competencies are advantages that no competitor can reasonably offer or replicate.

Identifying your company’s core competencies – including its core products and most compelling competitive advantages – is an essential business strategy for proving your value to new and longtime customers. When you know your business’s core competencies, you can strengthen your company’s reputation, keep current customers, and grow your business with new sales and marketing efforts.

If growing your business means reaching new customers in different markets, research your target audience and use customer segmentation to differentiate your messaging.

What are examples of core competencies in business?

You may be wondering about your business’s core competencies. If you can’t immediately identify any, that’s OK. Core competencies can also be skills and abilities. 

Some typical core competencies include the following:

To explain further, let’s look at an example of a leader in each of these core competencies.

  • Consistent high quality: Google is the world’s leading search engine and one of the most-used email, calendar and cloud storage platforms. Its software quality remains consistently high, no matter the tool. Whether you’re using Google Photos to access your beloved memories, Docs to create and edit text, Google Analytics to gain website insights, Google Calendar to manage your time, or Maps to get around, you likely turn to Google for its ease of use, modern look and feel, and extensive organization options.
  • Incomparable value: Many companies use Dropbox for quick and simple file sharing because it makes these tasks easier and its price is widely seen as incredibly reasonable for its services. For a massive amount of cloud storage, offline file access, e-sign tools and watermarking features, business owners pay $24 per user per month.
  • Ceaseless innovation: Whatever QuickBooks version you use, QuickBooks has been the best accounting software for decades because it constantly adds new tools and features that other platforms just don’t have. The brand’s ceaseless innovation is the crux of its competency model and a primary reason it has long been seen as the first accounting software choice for businesses of all sizes. Read our QuickBooks review to learn more.
  • Clever, successful marketing: Chances are good that no matter where you live, you have an abundance of department stores to choose from when you need all manner of items. Despite the competition, Target has continued to expand largely because its brand is undeniable. Marketing images of employees in red shirts, its branded mascot Bullseye the white bull terrier, its familiar fonts, and its consistent red-and-white motif have caught the eyes of customers – and sellers – for decades.
  • Formidable size and buying power: Part of why McDonald’s has been able to expand its dominance worldwide is its size and buying power. The company is so large and has such massive buying power that it can easily afford to open new franchise locations wherever it pleases. It also has enough buying power and a large enough supply chain to purchase food at such low prices that it can sell meals at highly competitive prices.
  • Great customer service: Amazon is arguably the most omnipresent brand in the world, and its success comes in large part from its unparalleled ability to provide excellent customer service. Given that Amazon’s online marketplace lacks one defining core product and is instead a sea of options that fulfill myriad wants and needs, the company’s strategic planning has long involved an unflagging focus on customer satisfaction. Amazon Stores are also an excellent tool for businesses that want to start selling online.

While these examples name massive companies, even small businesses can identify core competencies. 

Key TakeawayKey takeaway
To make customer support part of your core competency set, learn to provide customer service like a luxury brand by monitoring customer feedback, tracking customer service metrics and researching your target audience.

What are examples of personal core competencies?

Entrepreneurs and small business owners should also understand personal core competencies. For example, whenever you search for new employees, you assess each prospective applicant’s personal core competencies. Every in-demand career skill someone lists on their résumé is a personal core competency. 

Chances are good that when you identify a job applicant with personal core competencies matching your organizational goals, you’ll move them to the top of the list to prioritize hiring for a cultural fit

Here are some examples of common personal core competencies:

  • Strategic planning
  • Excellent organization skills
  • Leadership and personnel management
  • Project management
  • Attention to detail

Personal core competencies can also involve highly industry-specific skills. For instance, if you work in information technology (IT), you may have IT management skills or excel at certain computer languages. You may even have unique experience working with specific customer types. 

When identifying your business core competencies, look at your employees' hard and soft skills to help pinpoint where you excel.

How can you identify your business’s core competencies?

You don’t have to be a massive corporation to identify strong core competencies. Small businesses can determine where they shine by following these steps: 

1. Look at your customers and clients.

Does your business cater to a specific group of customers or serve a niche market within your industry? For example, some people with IT degrees go on to work with students with special needs whose electronic educational materials must be modified to lessen learning challenges. A core competency of a company with a strong reputation for providing these services might be a special focus on working with clients with disabilities.

2. Turn to your company’s mission statement.

Did you launch your company to address a gap none of your competitors have filled? Look at your mission statement to remember why and for whom you launched your business. One of your core competencies is providing that product or service to that client base.

3. Discuss your core competencies with your team.

Conduct employee surveys asking what they think your company does especially well – in general and compared to the competition. Then, take their answers and compare them with yours. The overlap can point you to your core competencies. For example, if you run a restaurant and want to figure out how to survive as the industry struggles, meet with your team to identify your most sought-after meals and cuisines, and then jot those down as your potential core competencies.

4. Ensure your core competencies are actually core competencies.

Here’s an essential point to keep in mind: Just because you identify something your company does especially well doesn’t necessarily make it a core competency. Let’s use the restaurant example again: What if other restaurants in your area are also beloved for serving the same meals as your most popular items? In that case, you might not be able to qualify these meals as core competencies because, clearly, your competitors can replicate and offer them.

The problem with falsely labeling something a core competency is that you might shift your business strategy toward focusing on a less profitable product or service.

5. Outsource as needed.

No company can fulfill all of its necessary tasks in-house. If you find yourself struggling to prioritize the products and services that best distinguish your company, consider outsourcing other business needs so you can focus on making your core competencies the best they can be. For example, if your business’s core competency is selling the highest-quality handcrafted furniture in your area, outsourcing marketing and PR can give you the time you need to properly design and make the furniture.

6. Put your core competencies to the test.

Once you’ve determined your core competencies, pivot your business strategy to focus on them. If you notice more customers coming to your business – especially if they’ve left your competitors and turned to you – then chances are you’ve likely identified your core competencies. If not, it’s back to the drawing board – and taking the time to determine what distinguishes your business from others is never a bad thing.

Key TakeawayKey takeaway
Perform a competitive analysis to determine where your business is doing well, what the competition does better and where you need to improve.

A strong core makes for a strong business (or person)

Knowing your business core competencies gives you a robust base from which to shape your operations, marketing, outsourcing and other critical company needs. Or, if you’re currently seeking work, your personal core competencies can help you narrow down potential opportunities and stand out among potential employers. Just as in the fitness world, when your core is strong, the rest of you (or your business) gains strength too.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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