Distinctive Competencies

Distinctive Competencies

We’ve had several Management Tips recently around creating value, acquiring loyalty from patients, and similar topics. We wanted to provide additional testament to this with a very intriguing study. Many of the studies cited in Tips are very recent, i.e., mostly from the past couple years. This one is a bit older but one that continues to resonate.

McGee, Love, & Festervand examined closely the business of independent community pharmacy.1 In doing so, they describe the concept of distinctive competencies. An excellent example provided was that of Walmart, which leveraged significant advantage in distribution networks to save a tremendous amount of money and thus fuel their ability to offer goods at a lower price. Similar things can be said of Amazon, nowadays. In retail pharmacy, they identified several potential distinctive competencies such as quality image, cost controlling, services differentiation, and merchandising. Th researchers surveyed owners/managers of independent community pharmacies, asking them questions about the extent to which they employ various strategies that fit under each of these competencies. They also asked the responding pharmacies their actual net profit and net profit percentage from the previous year. In this way, the researchers observed some compelling results. They found that some pharmacies were engaged in practices underscoring 2-4 of these distinctive competencies, some only 1 distinctive competency, and quite a few engaged in none at all. Almost without exception, the stores engaged in 2-4 distinctive competency practices had higher net profit and net profit percentages than those practicing just 1, and those practicing 1 had greater net profit and net profit percentages than those practicing none. Additionally, it did not seem to matter which of the competencies were being practiced, so long as 1 and preferably more of them were being practiced.

In any setting, but especially in independent community pharmacy, pharmacy owners/managers must differentiate themselves from their competitors with cost-savings, service differentiation, unique and positive image, and/or some other way. Preferably, they do so in more than one area.

Additional information about Applications in Independent Community Pharmacy and Entrepreneurship and Innovation  can be found in Pharmacy Management: Essentials for All Practice Settings, 4e. If you or your institution subscribes to AccessPharmacy, use or create your MyAccess Profile to sign-in to Pharmacy Management: Essentials for All Practice Settings, 4e. If your institution does not provide access, ask your medical librarian about subscribing.

1McGee JE, Love LG, Festervand TA. Competitive advantage and the independent retail pharmacy: The role of distinctive competencies. J Pharm Mark Manage. 2000;13(3):31-46.  


Go to the profile of Shane Desselle
about 3 years ago

This is especially the case when economically pharmacy leans more toward perfect, rather than oligopolistic or monopolistic competition.