A core competency is a collection o

A core competency is a collection of competencies that crosses divisional boundaries, is widespread within the corporation, and is something that the corporation can do exceedingly well. Thus, new product development is a core competency if it goes beyond one division. For example, a core competency of Avon Products is its expertise in door-to-door selling. FedEx has a core competency in its application of information technology to all its operations.
A company must continually reinvest in a core competency or risk its becoming a core rigidity or deficiency, that is, a strength that over time matures and may become a weakness. Although it is typically not an asset in the accounting sense, a core competency is a very valuable resource—it does not “wear out” with use. In general, the more core competencies are used, the more refined they get, and the more valuable they become. When core competencies are superior to those of the competition, they are called distinctive competencies. For example, General Electric is well known for its distinctive competency in management development. Its executives are sought out by other companies hiring top managers. Barney, in his VRIO framework of analysis, proposes four questions to evaluate a firm’s competencies: