Core Competencies
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Core competencies are defined as what a company does best and how it does it. It is the company's main focus which gives it a competitive advantage. A company must have a clear understanding of its core competencies in order to ensure continuous success. For example, the Ernest and Julio Gallo winery Inc. is able to focus solely on its sales distribution. This is because Gallo does not own any vineyards and outsources 95 percent of its grape production. By doing this, they are letting the farmers take all of the risks. This enables them to concentrate on what it does best -- wine production and distribution. (Quinn 43)
Emphasis on core competencies and service are what makes a company profitable. Managers must consider each activity in their value chain on a "make or buy" basis and seriously consider outsourcing the activity when the company itself cannot internally achieve "best in the world status...