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CMA Intermediate · Operations Management and Strategic Management · Strategic Analysis and Strategic Planning

Which statement about core competencies, as used in internal strategic analysis, is correct?

Core competencies are internal skills that deliver customer value, are hard for rivals to imitate and open access to a variety of markets. They are not simply anything done better than a weak rival, nor balance-sheet assets, nor external industry conditions.

  1. AThey are any activities the firm performs better than its weakest rival
  2. BThey are skills that are valuable, hard to imitate and give access to a variety of marketsCorrect
  3. CThey are assets recorded in the balance sheet at historical cost
  4. DThey are external conditions that favour the industry

Explanation

Following Prahalad and Hamel, core competencies are collective learning and skills that provide customer value, are difficult for rivals to copy and allow entry into multiple markets. They are internal and often intangible, not balance-sheet assets. Being better than only a weak rival does not make a capability core.

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