Question

Which of the following is true?

a.Core competency theory argues that an organization should outsource specific core assets.
b. Core competency theory argues that an organization should focus exclusively on its core business competencies
c. Core competency theory argues that an organization should not outsource specific commodity assets.
d. Core competency theory argues that an organization should retain certain specific non-coreassets in-house.

Answer 1

According to core competency theory, a business should concentrate on its core business competencies, or key strengths, to maintain a competitive edge, rather than diversifying too broadly or outsourcing these critical functions.

Step-by-step explanation:

The core competency theory suggests that a business should focus on its specific strengths and areas of expertise, often referred to as core competencies. These are the unique capabilities that give a company a competitive edge and are central to its ability to create value. The core competency theory does not stipulate that a firm should outsource its core assets; rather, it proposes that companies should concentrate on their key competencies and maintain them in-house. By prioritizing these competencies, they can outperform firms that diversify too widely. Additionally, businesses could consider outsourcing non-essential functions, often referred to as 'commodity assets,' that are not integral to their core competencies. Therefore, the correct option is b. Core competency theory argues that an organization should focus exclusively on its core business competencies.