Core Competency
This is the one thing that you can do better than your competitors, in an area that matters to your customers.
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Focusing on your core competency
In product design , deciding whether or not to outsource either production or design process is a strategic decision with long-term implications. It involves determining your core competency, and deciding what are your Competitive Advantages over your competition that you can sustain for a long period of time. If you think you need to develop product design as a core competency for your long term success, then dont consider outsourcing as an alternative.
This sounds obvious on the surface, but its amazing how many companies got this wrong. In the short term desire to cut costs, many companies outsource production to Asia, only to find out that without the production, they loose their advantage in design and in development. With the hassles of producing, you have the advantage of learning, which is essential to long term competitive advantage (if that is the route you choose). Companies such as Xerox discovered this when they outsourced production to Fuji. As did a whole host of industries from TV's to appliances.
Core Competencies are good because they:
1. give you access to markets
2. hard for competitors to imitate
3. are good for Marketing, in that they create an image in the customers mind (positioning) :
Example; Honda's core competency in engines...and customers know it, so they buy the cars. See also our discussion on the Honda-way for quality management
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