If the answer to each of these questions is yes for a particular competency, it is considered to be a strength and thus a distinctive competence.7 This should give the company a competitive advantage and lead to higher performance.8
It is important to evaluate the importance of a company’s resources, capabilities, and competencies to ascertain whether they are internal strategic factors—that is, particular strengths and weaknesses that will help determine the future of the company. This can be done by comparing measures of these factors with measures of (1) the company’s past performance, (2) the company’s key competitors, and (3) the industry as a whole. To the extent that a resource (such
as a firm’s cash situation), capability, or competency is significantly different from the firm’s own past, its key competitors, or the industry average, that resource is likely to be a strategic factor and should be considered in strategic decisions.