Core competencies are the defining characteristics that make a business or an individual stand out from the competition and enable them to gain a competitive advantage. They refer to the distinctive abilities of an organization or individual to successfully plan, deploy, and execute actions that yield desired results. The ability for a company to identify and sustain its core competencies that ensure its competitive ability is essential for its long-term success.

The concept of core competencies first emerged in the 1990s as a way to evaluate business strategies more holistically, beyond just traditional measures such as financial results. It is a new paradigm for assessing business performance because it looks at the company’s ability to execute and sustain activities that will build a competitive advantage.

People, physical assets, patents, brand equity, and capital are all components of a company’s core competencies. Organizations can use core competencies to provide direction to their strategies and operations, identify goals, and organize resources. The development and exploitation of core competencies can be the driving force to help a company move to the next level of performance.

Examples of companies that have core competencies which have enabled them to remain successful for decades include McDonald's with its impressive network of restaurants and its efficient processes, Apple's expertise in product design and its ability to innovate, and Walmart's understanding of customers' shopping needs and development of supply chain expertise.

Utilizing core competencies is essential in the changing business environment today. By identifying and exploiting core competencies, businesses can capitalize on opportunities, accelerate growth, and reduce risk. Core competencies are more important than ever as businesses look for ways to stay ahead of the competition. They help organizations to create a sustainable competitive advantage and position themselves to be increasingly agile in a constantly changing landscape.