Definition of Core Business

The core business is the main activity of a company, often the historical activity. However, it brings together the organization’s most advanced and profitable area of ​​expertise. And also, it is the most important and best-controlled activity within the value chain.

And also, over time, the core business may evolve or even change completely. Therefore, it is a strategic decision taken about the evolution of the potential of a market. The leaders of a company need to identify their key skills and capitalize on them. By refocusing on what it knows how to do, its financial performance can achieve better results. It could envisage subcontracting all the rest.

However, the core business is a competitive asset; let’s see how to highlight it.

How to take advantage of your Core Business?

The company’s main purpose is to leverage its core business area to increase sales and profitability.

Several factors influence strategic choices:

  • in-house know-how and knowledge,
  • the ability to innovate in marketing,
  • the ability to provide quality customer service,
  • the product that delivers,
  • the mode of management that it is possible to practice,
  • time management constraints,
  • constraints in terms of procedures,
  • financial constraints,
  • restrictions in terms of equipment, etc

It will be for the leader to highlight the company’s strengths and adapt to internal and external constraints. He will thus be able to concentrate or gradually develop his.

Some very useful tools to determine your Core Business:

  • market research,
  • the day before,
  • the canvas business model,
  • the SWOT,
  • PESTEL analysis.
  • Examples of core businesses:
  • focus on technological innovation,
  • focus on quality or after-sales service,
  • specialization in marketing innovation,
  • upstream integration (supply),
  • downstream integration (distribution),
  • creation of housing stock,
  • excellent customer service,
  • logistics know-how, etc

The Evolution of the Core Business

Core Business

However, markets and the environment are constantly changing, which leads companies to develop theirs.

We can consider four situations:

1) Maintain the status quo.

It is a question of staying the course on the set objectives: the offer of products and services is maintained, the targeting intentions remain unchanged.

2) Optimize your Core Business

And also, we seek to improve the product and service offering by capitalizing on its strengths, assets, and opportunities in this strategic perspective.

3) Extend the boundaries of the Core Business

However, the extension of the considers if internal resources allow it: expansion of the core target, new products, new services, new guarantees, etc.

4) Reinvent its Core Business

However, this is about making a strategic shift without forgetting the company’s fundamentals. And also, it will be necessary to target differently or create new products or services. It is a risky strategy that requires reflection, study, and preparation but is sometimes unavoidable.

Refocus on your Core Business and develop it.

Therefore, once your core business is well defined, it recommend to focus on it and outsource activities that are not part of it to avoid dispersing its resources.

It is not a question of wanting to do everything but of choosing: we will focus on the most profitable and promising activities. Once the potential for profitability has maximized, we can move towards opportunities further away from the.

This way of doing things allows:

  • to increase its client portfolio,
  • to improve its brand image,
  • And also, to optimize its distribution channels,
  • accelerate returns on investments, etc

However, focusing your efforts on your can be risky. Excessive specialization can weaken the company, for example, in a sudden downturn in the market.

Diversification and related development.

To ensure its survival in the market, the company must also consider its diversification.

But as long as the related activities have not reached their maturity, it seems wise not to allocate too many resources to them, weakening the other poles of activity.

Also Read: What are the Liabilities of a Business?

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