Core Business is the company’s core business. It is the primary activity, the one on which the company specializes and on which it should focus its efforts, from a strategic point of view.
Normally, the core business is the activity with the highest weight among the performed ones, that is, with the greatest participation in sales. It may also be the original operation, at the time of its founding, in organizations that have expanded in scope over time.
The success or failure of a corporation can be associated with an understanding of its core business. Staying focused on the area of expertise is the most frequent strategy, avoiding expanding activities too much. An alternative to grow without distancing itself from the core business is outsourcing, the outsourcing of activities that are not central to the company.
Core business examples
Core Business Natura
Natura’s core business is the development of cosmetics, perfumes and personal care products using corporate social responsibility strategies. Being sustainable is not only Natura’s mission, but it is in its core business because it is what sets it apart from the competition.
Core Business Coca-Cola
For Coca-Cola, its core business is the production, sale and marketing of some of the most loved drinks in the world. By including the expression “most loved” in the core business, the company already indicates paths for its business. This is essential to conduct the strategy throughout the company and mainly in the three focuses: production, sales and marketing, areas in which Coca-Cola works hard to exercise excellence.
Core Business McDonald’s
McDonald’s has a core business of delivering good food to consumers, in a short time and at low prices, always maintaining the culture of the McDonald’s brand.
How to identify the core business?
In a strategic way, the entrepreneur can think about the following script of questions to identify the core business of his company:
- What attracts the most customers to the company?
- Who are the main consumers?
- What does the company do better than the competition?
- What innovations does the company bring to the market?
- What are the best-selling services / products?
- What is the most profitable area?
- Who is who in charge at the company and why are those people there?
Difference between core business and core competence
Another concept that assists in core business management is core competence, which can be translated as the company’s core competence. It represents that function that is performed with excellence by the organization, such as the use of technologies, for example.
What differentiates it from the core business is that it is not about business activity, they are unique skills that become strategic for the business. There are three indicators of central competence: how difficult it is for competition to reproduce; how many markets can be accessed with this function; and how much it contributes to the final product.