DEFINITION of 'Core Competency'

A narrowly defined field or task at which a company excels. A firm's core competencies are difficult for its competitors to mimic, allowing the company to differentiate itself. Most core competencies will be applicable to a wide range of business activities, transcending product and market borders.

BREAKING DOWN 'Core Competency'

A core competency for a firm is whatever it does best. For example, Wal-Mart focuses on lowering its operating costs. The cost advantage that Wal-Mart has created for itself has allowed the retailer to price goods lower than most competitors. The core competency in this case is derived from the company's ability to generate large sales volume, allowing the company to remain profitable with low profit margin.

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