Knowledge and Competence based Strategy

Competence based Strategy

The core competence approach of strategy views the business in a particular way. For this approach business are open systems intermingling with their environments to obtain resources and deliver outputs. As per this approach of strategy, the capacity of the business to build up core competences that are not acquired by its competitors and that generate recognizable profits for consumers form the basis of its superior performance.

The business can create competitive advantage in both new and current markets as below:

  • By leveraging the presently available core competences
  • By building new competences
  • Through alliance relationships with suppliers, customers and also competitors

The collective learning or knowledge of the organization forms the basis of its core competences.


In recent time the study of core competences has concentrated more on knowledge as its main aspect. In an organizational perspective, principles, facts, skills, and rules which update the organizational decision-making, behaviour and actions are regarded as knowledge. The organization’s activities, competences, products and services are founded on this knowledge. Also the capability of the organization to build up new knowledge, and thereby core competences, faster and more efficiently when compared to its competitors form the key for its competitive advantage.

Knowledge and Resource based Approach

In the knowledge and resource-based approach to strategy, the point of concentration as the chief supply of competitive advantage is the business itself instead of the industry.

The business which is capable of performing extraordinarily in a global market is able to do so as it has certain qualities which make them both distinguishable from and better than their competitors. Core competences of the business are these distinctive qualities.

Core competences are certainly distinguishable for competences. While competences are Abilities acquired by all competitors in an industry form the competences where as core competences are acquired only by those who accomplish superior performance.

Core competences have to be based on superior knowledge. For a good strategy for business it is important to know the elements of the core competences, details of the knowledge on which they are formed, creation and management of knowledge and lastly about, the knowledgeable deployment of the core competences. Under standing these aspects are essential to give proper strategic direction to the business.

The exclusive source of core competence is knowledge. For this reason knowledge becomes the critical reason for an organization to achieve sustainable competitive advantage. As an upshot of the rapid speed with which the business environment is changing in the present scenario, competitive advantage is not easy to accomplish. Even more difficult is to sustain it.

To accomplish and sustain competitive advantage it is essential to generate new knowledge at a pace which is not possible for its competitors to catch up with. Individual and organizational learning form the basis for knowledge creation.

In short the present business world demands that organizations have to build up behaviours and structures which will facilitate them the generation and handling of knowledge more successfully than their competitors.

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