Final answer:
Core competencies, which refer to a company's focus on a narrow set of products or services, can become limitations in the face of industry or environmental changes. These competencies need to be managed adaptively to prevent them from becoming core rigidities. Continually developing new skills and capabilities helps maintain a competitive advantage.
Step-by-step explanation:
When discussing core competencies within businesses, we are referring to the principle that companies focusing on one or a few products are often more successful than those that spread their efforts across a wide range of products. This concentration on a narrow set of products or services allows a business to specialize, increase efficiency, and potentially become a market leader in its specific sector. However, in response to significant changes in the industry or general environment, these same core competencies can evolve into limitations if not managed adaptively.
Core competencies can become outdated or less relevant as comparative advantage shifts due to new technologies, customer preferences, competitors' innovations, or changes in regulatory landscapes. They might turn into core rigidities, which are former strengths that now serve as obstacles to adapting to the changing environment. Successful businesses should recognize this potential and strive to retain flexibility by continually developing new skills and capabilities that align with emergent industry trends and consumer demands. By doing so, businesses can maintain their competitive edge and ensure that their competencies continue to provide value in a dynamic market.