CORE BUSINESS.

DISTINCTIVE COMPETENCE

Accelerate your business with these expert tips on "Core Business. Distinctive Competence". Analyse and discover this TIP!

The concept of core business, in the field of business creation, refers to the activity that has the capacity to generate value and is essential to achieve an competitive advantage (+) of great benefit to your company. The translation of core business into English could be distinctive competence, key competence, core competence or line of business. The Core Business of your business is that main activity that provides you with the main source of incomeor the largest differentiation (+) with respect to your competitors . It is the activity that allows you to achieve a competitive advantage. The meaning of Core Business also refers to that which productive activity that a company carries out and allows it to generate value in order to compete with other companies in its sector. Also, the main activity of a company should be the one that brings in the most revenue. In addition, it should put you in the best possible position vis-à-vis your competitors.

To identify the Core Business of your company, we recommend that you follow the advice of the TIP. key activities (+). So, for your company to be successful and your project to grow as a company Gazelle (+).you need to focus on your core business to differentiate yourself from the competition. In this way, In order to attract a larger number of customers, an exercise of differentiation and specialisation in a certain area must be carried out. The Core Business will allow you, if well managed, to establish a competitive advantage over other companies in the sector. Therefore, It is of vital importance to acquire that weight as it will allow you to consolidate an interesting market share for the company. It is like the heart of your company, the raison d'être of your business. The root and matrix of your business. Sometimes, it may happen that When a business grows and diversifies, these offshoots can stray too far from the heart of your original business. 

Prestigious consulting firms such as McKinsey and Bain have already pointed out that the 80% of the most profitable businesses are companies that are dedicated to their 'core' business. In other words, One of the keys to the profitability of your business is not to stray from your leitmotiv, of the heart of your company. McKinsey also pointed to data along the same lines. Companies that over-diversify their structure, seeking to operate in multiple segments at the same time, no longer have significant growth results. 

So, first of all, you need to clearly define and understand the raison d'être of your business, you need to understand what your core business is all about:

HOW DO YOU FIND THE CORE BUSINESS OF YOUR BUSINESS?

A thorough analysis of your company is necessary. In this regard, it is important to answer the following questions in order to obtain the necessary information.

HOW DOES MY PRODUCT COMPARE WITH THE COMPETITION?

It is necessary to study the characteristics of our product and those of our competitors.

HOW IS MY PRODUCT DIFFERENT?

Once we have studied the products on the market, it is time to analyse how our product differs from the rest.

WHY DO CUSTOMERS CHOOSE US?

It is a matter of identifying the advantages that our product has and why consumers will buy from us.

WHERE IS THE COMPANY HEADING?

The answer to this question will make us aware of whether we need to apply any modifications to the product we sell.

WHAT DIFFICULTIES DO I ENCOUNTER IN CARRYING OUT THE PRODUCTION?

The existence of problems hinder production and even slow it down. (see+ TIP bottlenecks). It is important to identify the errors in order to be able to act on them and solve them.

WHAT ARE THE CORE COMPETENCES?

The key competence or core business is defined through a study of the value chain, which allows the activities required to satisfy users, their costs and subsequent returns to be determined. Distinctive competence is not only about having the latest technology or particular production skills, both of which can be acquired from third parties. What really counts in the case of core business is the degree to which the company knows and learns how to use the available tools and technology, as well as its ability to coordinate them. The definition of each core business is essential for an organisation to opt for the outsourcing or subcontracting of some of its activities, or to opt for the implementation of improvements for specialisation and excellence.

Examples of core competences, or core competent, includee can find an example of Core Business in every company that exists and works in every part of the world. 

• A company that manufactures and sells clothing. At first glance, it would seem logical to think that its core business is fashion, but In looking deeper into the strengths, it can be detected that it has better technological systems for the cutting and dyeing of fabrics compared to the competition. Therefore, its distinctive competence would be in the industrial area.
• Two organisations participating in the same sector are not required to have the same core business.
  • For example, two car brands, one of which focuses on aesthetics and design, while the other one opts for and competes on the cheapest prices.
• Coca-Cola: The distinctive competence of this company is the sale of soft drinks. Its competitive advantage is the strong brand image.
• Amazon: This example will surprise you, the activity that generates the most profit for Amazon is the division of AWS. They have a competitive advantage in the field of servers, which make them more money than e-commerce itself.
• Apple: Although this company has a multitude of services and products, the iPhone is its main source of turnover. The company's core business is mobile phones.
• A company that develops software ERP has its core business in technology. The other areas are add-ons. In other words, they are important, but not vital for the continuity of the company.

The purpose of knowing your core business is to focus on your core activity so that you can develop quickly in the marketplace, seize opportunities and deliver more value to your end customers. It is to gain agility and efficiency in what you do best.

How to focus on your company's core business?

As a business grows, it will always it is necessary to add other activities that support the main activity. However, you must do this carefully. The larger the structure, the greater the impact on your competitiveness.

Focus on what you do best.

Over time, we often want to diversify our business and enter new niches. According to McKinsey and Bain & Company surveys, many companies lose their way when they decide to go down new paths. They have yet to generate significant results with their new businesses.

• For example: when Mattel acquired The Learning Company. While Mattel had its expertise in toy production, The Learning Company created interactive software for children. Two very different business areas, which led to the loss of millions of dollars.

The lesson learned here is: assess well before embarking on a completely new business venture.

Focus on the core business, the one that generates the competitive advantage. Focus first on being the best in your market. Then you can expand, but always in adjacent activities.

EXPAND INTO BUSINESSES COMPLEMENTARY TO YOUR CORE BUSINESS

The best way to focus on your core business while expanding your organisation is to look for adjacent business opportunities, as mentioned above. Thus, will cost you less time and resources to implement.

• For example, if you have a business consulting firm in finance, you can expand into management, strategic advisory, controlling and auditing businesses.

Always bear in mind that the idea is to add value to existing customers offering other solutions that are in tune with your market.

ADOPTS NEW TECHNOLOGIES

Bureaucracy is a normal consequence of the growth of an organisation. As we add sectors, processes, workflows, the structure also expands and becomes heavier. Still, the integration of this structure generates bureaucracy and the time spent on the strategic part is consumed by administrative activities. This is where technology comes in as a solution to most problems. Various applications facilitate business expansion, while eliminating bureaucracy: ERP systems, CRM, digital contracts and others. With them, processes become more agile and efficient. The advantages: document processing is almost automatic, wasted time is reduced and staff become more productive.

QUALIFY AND TRAIN. TRAIN YOUR WORKERS

After adopting the appropriate technologiesQualifying your teams is the next step. Qualified teams are more agile, have a higher level of excellence and produce the expected results. Organisations that invest in employee empowerment increase innovative capacity, business competitiveness and, of course, the strategic alignment. Keeping everyone focused on the core business requires training, continuous dialogue and good people management. Retaining the best talent should also be one of your priorities.

OUTSOURCING SERVICES

There is no need to sacrifice your core business to maintain a support structure. To cope with any situation in which you need to to gain competitiveness and maintain business sustainability, you must strengthen your core business, reduce costs and improve quality. To do so, you can outsourcing services and using external partners to implement activities that support the progress of the business.

• For example, a technology company may use partners for accounting, people management, cleaning and maintenance of the company and even some other administrative activities. For example, it is possible to focus on developing solutions that create value for your target audience.

Staying true to your company's core business is the best way to control your efforts, so enjoy these tips and expand your business wisely! In conclusion, a company's Core Business is the productive activity that is its main source of income. Added to this, it allows it to stand out from the rest of the companies in the sector with which it competes thanks to its competitive advantage.