Distinctive competence is a unique strength that allows a company to achieve superior efficiency, quality, innovation and customer responsiveness. It allows the firm to charge premium price and achieve low costs compared to rivals, which results in a profit rate above the industry average.
Ex: Toyota with world class manufacturing process.
In order to call anything a distinctive competency it should satisfy 3 conditions, namely:
- Value – disproportionate contribution to customer perceived value;
- Unique – unique compared to competitors;
- Extendibility – capable of developing new products.
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