What four criteria must capabilities satisfy for them to become core competencies?
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What four criteria must capabilities satisfy for them to become core competencies? Why is it important for firms to use these criteria to evaluate their capabilities’ value creating potential? |
Here is a tip:
Capabilities are based on the exchange of information by the human resources of the organizations.
Explanation
The four criteria that must be satisfied to be sustainably and competitively advantageous are:
Valuable: A capability is an asset since it assists the firms to explore opportunities or to minimize the risk to external surroundings.
Rare: A capability is possessed only by a few of the current or capable competitors. This lowers the risk of capabilities being detected by the competitors as well.
Costly to imitate: A capability is costly to emulate because other firms may have to flesh out huge sums for replication.
Non-substitutable: A capability is non-substitutable when no similar strategy exists to replace it.
It is significant to use these criteria for having a competitive advantage, which can be sustained over time. When the competitors find it difficult to replicate the capabilities, it helps a firm in developing strategies that increase the value added by a firm in its products.
Verified Answer
Capabilities should satisfy the following categories of sustainable advantage:
Valuable
Rare
Costly to imitate
Non-substitutable
It is crucial for the firms to use these criteria to enjoy a sustainable competitive advantage and keep adding value to their products by developing core competencies.
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