Final answer:
A firm excels in a skill or activity over its competitors through its core competency, which could be a comparative advantage, a strong brand, or operational efficiencies. Focusing on a limited range of products or services often leads to greater success in a business's core areas, providing a competitive edge.
Step-by-step explanation:
A skill or activity in which a firm excels compared to rival firms is often referred to as its core competency. This concept is crucial in the business world as companies that concentrate on their core competencies typically have a competitive advantage.
Core competencies may manifest in various forms, such as the ability to produce goods or services more cost-effectively than competitors, which is known as a comparative advantage.
Beyond comparative advantage, a business might have other key strengths, like a well-established reputation for price competitiveness, a well-respected brand name, or unique operational methods that allow for economies of scale.
These advantages enable a firm to outperform its rivals, and they are often the result of focusing on a few products or services rather than a wide range, which allows for specialization and efficiency.