Two tools are used to identify a core competence:
The first is a set of four criteria that can be used to determine which capabilities are core competences: valuable capabilities, rare capabilities, costly to imitate and non-substitutable.
The second tool is the value chain analysis which allows the entity to understand which parts of its operations create value and which parts do not.
Competitive advantage exists when strategy is implemented that creates superior value for customers and competitors are unable to duplicate it or find it too costly to imitate (Hitt et al, 2012, pp. 86:90). Johan Patz (n.d.) has shown that value chain analysis is the path upon which products or services travel as value is added before reaching the end consumer.