Capabilities and Distinctive Competencies
Capabilities: An organization’s resources which are critical in imparting it with competitive advantage are called distinctive capabilities. When the capabilities originate from an attribute which other firms do not have then they form an organization’s distinctive capabilities. In addition to having a distinctive characteristic, it should also be sustainable and appropriable.
When a distinctive capability is able to continue functioning over a period of time it is said to be sustainable. When the organization which holds a distinctive capability is able to benefit mainly from it then it becomes appropriable. An organization can derive the distinctive capabilities mainly the organizational architecture, organization reputation, and innovation. The relationships between the organization and the stakeholders are critical in developing these three aspects of the organization.
Distinctive competencies: Distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitor and “gives it an – advantage over them. Distinctive competence can lie in different areas such as technology, marketing activities, or management capability.
A company needs to develop its strategy that utilizes its distinctive competence to gain competitive advantage. It must be remembered that what distinctive competence of a firm may change with time as other companies develop new capabilities and with a change in market requirements. Therefore companies need to identify their distinctive competence by careful analysis, and if required, strive to develop new competencies to meet changing market requirements and competitive situation.
For instance, consider an information technology organization. For this to compete in the software industry it should possess the competencies to write programs and design tools which have to be combined together to provide it with the competitive advantage in the industry.