Examples of distinctive competencies include lean manufacturing, management development and payroll processing. Distinctive competencies are unique capabilities of a company that set it apart from others in the industry, giving it a competitive advantage. A company's distinctive competencies usually arise from sources such as unique business processes and technology.
A company's competitors can not imitate its distinctive competencies over the short term, which gives it a competitive advantage. A distinctive competency is only advantageous to a company if there is a demand for it within the market. A company must assess its internal and external environment to determine its distinctive competencies. A firm typically integrates its distinctive competencies into its corporate strategy since they are the company's strongest qualities. A company must nurture its distinctive competencies to evolve with the changing environment to sustain its competitive advantage. By cultivating a learning environment a business creates a dynamic capability that enables it to stay ahead of its competitors; this dynamic capability must be protected to prevent it from being replicated by competitors. Management should constantly monitor changes within the market, and when necessary realign a firm's distinctive competencies to suit the market. A company such as McDonald's uses its distinctive competency of effective control systems to earn high profits from its franchises.