Study on Determination and Exploitation of the Core - The

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					     Study on Determination and Exploitation of the Core competence of the
                Medium and Small Sized Technological Enterprises

                             Haili Xia1   Qiangguo Pu2     Nikos Mastorakis3
1                                                      2
    Department of Management Science and Engineering, Computer Center, University of Science and
               Technology of Suzhou, 298 Binhe Road, Suzhou, Jiangsu 215011, China
                3
                  Hellenic Naval Academy, Terma Hatzikyriakou, 18539 Piraeus, Greece
               Also: WSEAS, Ag.I.Theologou 17-23, 15773, Zografou, Athens, Greece


Abstract: - In this paper the authors analyze the concept of “The Core Competence of the Corporation”.
Based on the establishment of the component system of the core competence, the authors do research on the
feasible methods for determination and exploitation of the core competence of the medium and small sized
technological enterprises.


Key-words: - Medium and small sized technological enterprises, core competence, determination, exploitation


1. Introduction
                                                            the recent 20 years. Structural measures to promote
The concept of core competence was first presented by       the medium and small sized technological enterprise
C.K. Prahalad and G.Hamel in their landmark paper           survival and growth as high performance enterprises
“The Core Competence of the Corporation” published          include business incubators, research and development
in the Harvard Business Review in 1990[1]. It has           or technology centers or parks, apprenticeship
become a hot research spot in corporation strategic         promoting programmers and so on. In this paper, the
management theory. This theory points out that the          key factor which restrains the sustained development
analysis of the corporation competence should               of the medium and small sized technological
concentrate on the corporation itself, the key to           enterprises is summed up to the enterprise ignores the
corporation management strategy lies in cultivating and     importance of the core competence which gives
developing the core competence of the corporation           continuous competitive superiority to enterprises
which enables the corporation to occupy an                  themselves. Therefore, the composition of the medium
advantageous position in future markets and create the      and small sized technological enterprises is researched
sustained competitive superiority. The core competence      into, and then based on establishing the component
of the corporation is the collective learning in the        system of the core competence, the feasible methods of
organization, especially how to coordinate diverse          determining and exploiting the core competence of the
production skills and integrate multiple streams of         medium and small sized technological enterprises are
technologies.                                               proposed.

Nowadays the medium and small sized technological
enterprise has been playing a more and more important       2. The component system of the core
role in national science & technology developing,
regional economy increasing, technological innovating,      competence of the medium and small
high-tech developing and industrialization. But because     sized technological enterprises
of the influence of the enterprise's inherent reasons and
outside factors, the growth of the enterprises generally    Since the common challenge faced by the medium
lacks of impetus directly restrains the enterprise's        and small sized technological enterprises all over the
sustained development. For example , in China the           world is that is that under global pressure, businesses
average age of the medium and small sized                   have to become much more responsive and demand
technological enterprises is only 3 – 4 years,              flexible production, high skills and innovative
furthermore the survival rate is only 20%–30% during
workers[2]. The enterprise’s core competence must           results of R & D ability and the extent that the
involve many factors, it is necessary to establish a        scientific and technical level of the medium and
corresponding component system according to the             small sized technological enterprises leads in the
characteristics of the enterprises so as to make a          industry and the enterprise’s actual achievement in
scientific and objective analysis. Figure 1 is the          technical development but also the enterprise’s
component system of the core competence of the              derivation of core technology and scientific and
medium and small sized technological enterprises.           technical     development      and      transformation
From figure 1 we can know that the core competence          ability .The adaptability to changes refers to the
of the medium and small sized technological                 enterprise’s comprehensive rapid reaction ability for
enterprises is composed of innovation ability,              market opportunities, new technologies and various
knowledge management ability, the adaptability to           kinds of emergencies[3]. These abilities are mainly
changes, organization and coordination ability,             based on the intangible assets of the enterprises such
development ability and specialty ability. For              as organizational culture, expertise, human resources
example, the Innovation ability reflects not only the       and innovative spirit and so on.




                                                      Innovation ability


                                                      Knowledge management ability



                                                      The adaptability to changes
   The core competence of the medium
   and small sized technological enterprise
                                                      Organization and coordination ability
   enterprise’s core competence

                                                      Development ability


                                                     Specialty ability



Figure 1   The component system of the core competence of the medium and small sized technological enterprises


3. The determination of the core                            competence of the medium and small sized
                                                            technological enterprise must be constructed on its
competence of the medium and small                          advantages based on expertise, excelsior skill, and
sized technological enterprises                             innovation spirit.

The core competence is considered to not only               3.1 The core competence should be laid the
forming and keeping long-term competitive                   foundation in the organic system of the
advantage that shows unique characteristic of the
                                                            enterprises
enterprises but also becoming the high value-added
                                                            The organic system of the medium and small sized
sources appreciated by customers. According to the
                                                            technological enterprises is mainly composed of the
point of view of the world famous McKinsey
                                                            intangible assets such as organizational culture,
Company, to build and develop core competence
                                                            administration     system,     human       resources,
needs large quantities of resources and only 3-5
                                                            technological innovation and so on. Since the
fields can core competence be built even for a
                                                            medium and small sized technological enterprises are
famous multinational corporation. As far as the
                                                            engaged in high-tech industry, which is not only
medium and small sized technological enterprise is
                                                            high-paid but also full of risk, Its strategic
concerned, owing to their too limited resources, only
                                                            management can but rely on the whole group of
1 or 2 fields which are the most familiar and expert
                                                            qualified technicians and managerial staff[4]. In the
by enterprise itself could be built. The core
past ten years, many cases of the medium and small          environment, the medium and small sized
sized    technological    enterprises    of    China        technological enterprises must face a lot of austere
convincingly accounted for the point of view that the       challenges unavoidably. The exploitation of the core
whole enterprises excessively depended on one or            competence that makes continuous growth possible
two enterprise stars would make the enterprises often       is not only a key method of putting the axe in the
to take the wrong track and even to bankruptcy in           helve but also a vital access to forming and keeping
result.                                                     the competitive advantages. It is the embodiment of
                                                            the medium and small sized technological
3.2 The core competence is the foundation of                enterprise's strategic management.
the competitive advantages that shows unique
characteristics and difficult to imitate or copy            4.1 The exploitation of the core competence
For the reason that the core competence is                  through innovation and self-accumulation
constructed step by step in the course of the               Continuous innovation is the medium and small
long-term development of the enterprises and is             sized technological enterprise's lasting power of
contained within the distinctive intangible assets of       existence and development and a key method of
the enterprises such as organizational culture, human       realizing the core competence's exploitation too.
resources and innovative spirit, it is difficult for        Through innovation in technology, management,
competitors to imitate or copy. Once the core competence    organization and ideology, the medium and small
of the medium and small sized technological                 sized technological enterprises can exploit, and
enterprises begin to form, it should become the             furthermore cultivate new core competence.
foundation of the competitive advantages that shows         Innovation ability, especially the technological
unique characteristics and a potential access to a          innovation ability is a key portion of the core
wide variety of markets.                                    competence of the medium and small sized
                                                            technological enterprises.
3.3 Core competence should be the
headspring of hardcore value appreciated by                 The way of self-accumulation of a medium and small
customers                                                   sized technological enterprises is made up of two
Like shareholders, employees , government and so            routes: one is evolvement and another is gestation.
on, the customer is one of the most important part of       The route of evolvement is that a medium and small
the enterprise's chain of value. Existence and              sized technological enterprise constructs a special
development of a medium and small sized                     skill according to plan and objective stage by stage at
technological enterprise depend its success on              the same time of the daily grind. The route of
products and market competition at any time. The            gestation is that a medium and small sized
purchase of customer is the key factor that would           technological enterprise constitutes an expert group,
influence an enterprise's long-term development. The        which is in charge of cultivating peculiar core
core competence has important contribution to not           competences in 2-3 years. After the peculiar core
only the benefits of final goods appreciated by             competences being gestated successfully in the
customers presently but also the exploitation of a          expert group, it would be transplanted to the whole
variety of new products in future. These new products and   enterprise according to the plan at last.
innovation activities will help enterprises to attract
customer's more purchasing power. The core                  4.2 The exploitation of the core competence
competence of the medium and small sized                    through joining enterprises cluster
technological enterprises should be the headspring of       Nowadays competition among enterprises has been
hardcore value that customers attach more                   evolved from individuals into strategic alliance and
importance to, and then enterprise itself would be          enterprises cluster[5] .The eminent competitive
given the more amplified market prospects.                  advantage of enterprises cluster on the basis of
                                                            synergy effect has attracted researcher's attention of
                                                            economics and management. Cluster has been
4.     The exploitation of the core                         become one of the most important strategies for the
                                                            growth of the medium and small sized technological
competence of the medium and small                          enterprise. In the world, many medium and small
sized technological enterprises                             sized technological enterprises clusters congregate in
                                                            high-tech parks, among of these, the famous silicon
Because of the diverse and complicated management           valley in the U.S. is a good example. Since the
high-tech industry is full of risk, the medium and        merger, acquisition and founding affiliated company,
small sized technological enterprises obtain              the medium and small sized technological enterprise
competitive advantage of high-tech enterprises            can economize the limited resource and expedite the
cluster from economic factors including advantage of      course of exploiting its own core competence.
production cost, advantage of production's                Certainly, the medium and small sized technological
differentiation based on its quality, advantage of        enterprise must give more attention to not the profit
regional marketing, competitive advantage in market       or size but the imperative core competence itself
and capability of innovation in region.                   needs of the aimed enterprise.

4.3 The exploitation of the core competence               5. Conclusions
through knowledge alliance
In the newly emerging information age, the role that      In a word, determination and exploitation of the core
knowledge and information play in global high-tech        competence of the medium and small sized
competition and growth can not be overlooked              technological enterprises should operate according to
simply. As such, the ability to acquire, integrate,       the component system of the enterprises stage by
store and share applied knowledge has become an           stage. The core competence of the medium and small
indispensable key point in establishing and               sized technological enterprises must be constructed
maintaining a sustained competitive edge. In order to     on their advantages based on expertise, excelsior
adapt the challenge of knowledge competition, the         skill, and innovation spirit.
medium and small sized technological enterprises
must carry on knowledge alliance. Knowledge               References
alliance is used to obtain not only the explicit
knowledge, but also the tacit knowledge, and then         [1]C. K. Prahalad and Gary Hamel, The Core
new capabilities should be created. In sum,               Competence of the Corporation, Harvard Business
                                                          Review. May/Jun, 1990, 68(3), pp. 79-91
knowledge alliance can help the medium and small
sized technological enterprises to have the power to      [2] Banfield P, et al, "Competence-based training for
update their core competence and exploit new core         small firms - an expensive failure?" Long Range
competence.                                               Planning, 29, 1, Feb, 1996, pp 94-103
                                                          [3] Qiangguo Pu, Haili Xia, Zhengqin Wu, Ying Liao,
4.4 The exploitation of the core competence               Nikos Mastorakis, The System Parameter Fusion
through enterprise expansion                              Principle and its Application to Evaluating the Core
Enterprise expansion is necessary logic of the            Competence of the Corporation, WSEAS Transactions
medium and small sized technological enterprise           on circuits and systems, Issue 2, Vol. 2, pp. 414-419
development, the process of enterprise development
is the enterprise expansion indeed. In order to exploit   [4]Liyong Wang and Qiusheng Zhang. Framework of
the core competence successfully as soon as possible,     Theoretical Analysis of Core Competence-based
the medium and small sized technological enterprise       M&A, Chinese Business Review, 2003(3)
could cooperate with other enterprises which possess      [5]Port, M.E., Clusters and New Economics of
rare core competence through merger, acquisition, or      Competition.    Harvard     Business Review,
founding affiliated company. Through the way of           November-December, 1998. pp. 77-99

				
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