Study On The Core Competence Of Service Enterprise

Since the publication of the Core Competence of the Corporation by Prahalad and Hamel in Harvard Business Review in 1990 .the academia has paid more and more attention to the heated topic on the core competence of corporation, and more and more corporations have turned to list it about how to build core competence among one of the most important strategies. However most research on core competence has a close link with the manufacturing since its birth but few is related with services firms. With the increasing importance of services in economy in all nations it's time to undertake systematic research into the core competence for services firms not only for the purpose to fill up the theoretic gaps but also to meet the practical needs. This is right the purpose for the author to focus on this topic for the dissertation which is organized in seven chapters.The first chapter is an Introduction which mainly introduces about the background, purpose, content, significance, method, thinking and framework for this research. In the era of services economy the development of services is faced with great opportunity but also with great challenge while the competitive environment has changed quite a lot. Under such a background to choose core competence for services firms as the topic if of great significance either for theory and for practices, especially for China where the development of service industry is lagged behind and should be quickened. In this chapter the author reviews lots of related literature on core competence and those for service firms.In the second chapter the author focuses on the exploration into the theoretical foundations for the research on core competence for services firms, among which the Services Marketing Theory, Strategic Management Theory, Knowledge Economy and Knowledge Management Theory, and Innovation Theory are included. In the era of services economy the theory of Services Marketing can not only be used as a powerful tool for analyzing the marketing for services but also a guideline for industrial marketing. The Strategic Management theory mainly discusses the foundation for formulating of enterprise strategy. With the development of Strategic Management Theory the theory of Core Competence theory has played a more and more important role in the strategic management theory. The theories of Knowledge Economy and Knowledge Management have well explained the importance of knowledge as a key factor for investment and about how to obtain competitive advantages through knowledge management. And the Innovation Theory discusses about how to achieve competitive advantages and innovative methods through innovation. From different perspectives the above-mentioned theories provide basic thinking, analytical method and tools for the research on the core competence for services firms. On the ground of reviewing the basic thoughts and development traces the author analyzes the feasibility and usefulness of these four theories for his own research on the core competence for services enterprises.The third chapter undertakes theoretical analysis on the core competence for services firms. Firstly the author discusses the meaning of services, with emphasis on the basic characteristics of services as intangibility, heterogeneity, simultaneous production and consumption and perishability, makes a classification of services according to the nature of services, and points out the uniqueness in operation and management for services firms. The author then discusses the four specific characteristics of core competence of enterprises, which are value, heterogeneity, prolongation, durability and knowledge-based. Value means that core competence can yield value for the enterprises both from customer and enterprise; Heterogeneity means the uniqueness of core competence which can not be easily imitated by outsiders. Prolongation refers to the possibility of self-imitation and duplication of the core competence by the enterprise its own. In the end the author analyzes the content of enterprise core competence on the basis of the above two discussions. From these analyses the author thinks the enterprise core competence should take the human as the core, should take the knowledge, skill, continuous innovation of technology and management as the sources, should be based on optimized service system and service brands, should be built on emphasizing and satisfying customer expected value, and should be customer-perceived-value oriented, with the purpose to increase the competitiveness of the service enterprises.The author explores into how to identify the core competence of enterprises in the fourth chapter. Generally the basic methods for identifying the enterprise core competence can be classified into Inner Identification and Outer Identification, Qualitative Identification and Quantitative Identification. After reviewing these general methods the author points out their shortcomings in operation and accuracy. To overcome such shortcomings the identification of core competence of services firms should be centered around the natures of the enterprise core competence, especially its primary characteristics of Value which can be displayed from two levels of customers and enterprises, and from which all other characteristics of enterprise core competence are derivated. By analyzing the customer perceived value and the value-added process for core competence of service firms, and with the tools of Skill Tree by Compell and Goold and Value Chain by Porter the author proposes a value-based method for identifying the core competence of enterprises.Moreover the identification of core competence can be classified into Pre Ante Identification and Ex Ante Evaluation. The latter can be undertaken by the method of Fuzzy Comprehensive Evaluation (FCE) . By the end of this chapter the author introduces this method.The fifth chapter focuses on the factors which have impacts on the formulation of the core competence of service enterprise. These affective factors are the resources owned by the firm, knowledge and skill, organization and management, and enterprise culture. Among which the resources functions as a foundation and carrier in the formulation of its core competence. Its types, quantities, quality, the cost for obtaining,and the deployment ways can all have influences on the formulation of core competence for service firms. Thus the service firms should and could develop their core competence though more investment and upgrading of their resources. Knowledge system is a reflection of the specific core competence in the management, along with skill which can have direct influence on the formulation of enterprise core competence, hi this chapter, there is an analysis on the knowledge and skills of service corporations, which is accumulated wealth during the development of corporations. A wide range of knowledge and skills are one of the essential factors for the advantages acquired by corporations in the market, so the forming of the core capability of corporations must pay emphasis on the accumulation of knowledge and skills. The influence of organization and management on the corporation's core capability is illustrated as: design and flexibility of management have a direct influence on core capability; at the same time, organization and management play an executive part in the formation of core capability, thus the core capability should innovate the organization and management; the core value in corporation culture is an invisible factor of forming the core capability, which has a strong effect on the behaviors and attitude, and embodies in management practice through the decision process and behaviors. Furthermore, the renewal of value is a vital factor when forming the core capability.The author in the sixth chapter mainly discusses how to foster and develop the enterprise core competence, which is one of the most important parts of the enterprise core competence strategy. The primary step for fostering enterprise core competence is to determine its procedures, which the author thinks are composed of three parts: to work out the strategic plan for fostering enterprise core competence in order to determine the future objectives; the division of organization, and the implementation of the strategy of Core Competence Fostering. To foster core competence both resources inner and outside the enterprise should be fully used of. The way to utilize the inner resources of the enterprise is endocentric aggregation, which means full use of the self-owned resources for the purpose of fostering core competence. The methods for fostering core competence inner the enterprise are incubation and evolution, which can be realized through improving service quality, building up service brand, enhancing customer relationship management, undertaking internal marketing, and establishing human-centered enterprise culture. The way to utilize the resources outside the enterprise for fostering enterprise core competence is mainly through Outward Integration, which can be realized via Acquisition and Strategic Alliance. The integration for the former method is realized after acquisition with other enterprises, and the latter can be realized through successful establishment of strategic partners. The successful fostering of enterprise core competence is only the first step. Due to environment change and its rigidness the core competence might loose. So, careful maintenance should be undertaken so as to keep it longer. To solve the problem of such a rigidness the core competence should be continuously innovated, which can be realized through organizational learning, and innovations of technology, value, organization and management.The 7the chapter is a research about the core competence of service corporations, using the example of EMS. Based on the former analysis, we perceive that there are 4 factors influencing the core capability of service corporations , that is resources, knowledge and skills, organization and management, and culture. With the inner meaning of these four factors, we can evaluate the situation of the EMS in our example. In this chapter, I design 7 variables to measure the core capability of corporations: human resources capability, employees' capability, the organizational system, basic construction, management capability, customer guidance, and client serving capability. Meanwhile, I list competitive advantage as a middle variable, and reflects the core competence of service corporations through valuing the relationship between the 8 variables and interests, By the survey of more than 40 EMS's, collecting information and using the new statistical skill, I have a research on the core capability of service corporation through examples.