Distinctive Competence

Question

Give two examples of a distinctive competence that can be sustained and not easily duplicated. Explain why it is hard to copy these distinctive competencies.

Answer

John Kay (1999) identified that distinctive competences can come in different forms. They can be general, such as a government licence or a statutory monopoly, or they can be idiosyncratic competencies based on the characteristics of a firm. For example, strong brand reputation, tacit knowledge embedded in organisations and trade secrets. One particular example of an idiosyncratic distinctive competence is how Kentucky Fried Chicken (KFC) have a secret recipe for the coating that they put on chicken before it is fried. This is trademarked as the ‘Colonels Original Recipe’. Other organisations can sell fried chicken but it will not have the same flavour as chicken purchased at KFC. People may be able to work out the ingredients for the blend of spices for the coating but they will not be able to discover the ratio. It is hard for this competence to be copied because the recipe is locked in a safe at KFC’s headquarters (Chartrand, 2001). Only a few people know the recipe and they have signed confidentiality agreements. Another example of this distinctive competence is how Coca-Cola have a secret formula for their cola. Again, many different companies produce their own version of the soft drink cola, most notably Pepsi Co, but these do not taste the same as Coca-Cola’s cola. Again, other companies may be able to work out the ingredients for the recipe but they will not be able to work out the ratios needed to get the same taste. As with the KFC recipe, Coca-Cola’s cola recipe is locked away in a secret place and the few employees that know the recipe have signed confidentiality agreements.

References

Chartrand, S. (2001). Patents; Many companies will forgo patents in an effort to safeguard their trade secrets. New York Times. [Online] Available at: http://www.nytimes.com/2001/02/05/business/patents-many-companies-will-forgo-patents-effort-safeguard-their-trade-secrets.html?n=Top%2fNews%2fTechnology%2fColumns%2fPatents [Accessed 03/08/2016] Kay, J. (1999, Sept.). Mastering Strategy: Resource Based Strategy. Financial Times.