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Competencies reflect the know how of the organization, the demonstrated capacity to perform. Competencies are embedded in and made up from the processes of the business. Competencies are woven into the fabric of the business organization, with skills, past history, culture, and identity being married with the processes of the organization.

There are distinctive competencies, core competencies, and all other competencies. Distinctive competencies are unique and enable competitive advantage, core competencies are critical to strategic success, all other competencies are simply that, competencies necessary to operate the business.