The Application Situation Of Core Competence And Diversification Of Enterprises

As industry giants,GREE,SANJIU and other international well-known enterprises have ever stood in the industry peak.But,they fell from the top in some aspect overnight.What makes the industry giants?What makes the giant collapsed?Since the concept of "core competence"has been put forward in 1990s,many entrepreneurs firmly believe that as long as constantly emphasize core capabilities,they can let the enterprise continues to grow.However,as the above industry giants,pursuing core capabilities didn't make the enterprises remain invincible for good.Core capability has a problem can't be ignored,which was called core rigidity.The core rigidities will be highlighted if an enterprise blindly emphasizes competitiveness and ignore the change of external environment.Whether the core competence is applicable or not,it can be judged by the contrast of the strength between the extensibility of core competence and the core rigidity.In addition,they are influenced by the technological distance and and the marketing distance between the target business and the original business.The two are negatively related to the extensibility of the core competence,which are positively related to the core rigidity.What's more,there are still some gap about the study of core capability and core rigidity.Foreign and domestic scholars mostly concentrate their research on the point of this two singly,causing the study was kind of static and disconnected.We comparatively lack of research from dynamic views to expound the applicable situations of core capability and the communicating and transforming process of them.What's more,few of paper discuss the criterion through cases studies.This article adopts the method of case study to analyze the checkered developing process of Hengxiang machinery(group)co.,LTD.in Shandong to precipitate situation and describe the transformation path of core capability and diversification.It is found that the core competence is the most applicable in the situation that the technological distance and the marketing distance between target business and the original business are both small,and the core competence may not be applied in the situation with large technological distance and marketing distance.Besides,when the market environment is fierce in the market environment,enterprises should choose the target business with small distance and large technical distance.When the market environment is relatively unrest,the enterprises should choose the target business with large marketing distance but smaller technological distance.What's more,strong management ability can realize the appropriate transition of enterprise core competence-application-situation.When the enterprise has strong and stable management ability,it can choose the target business with large technological distance and large marketing distance.To some extent,this paper also has practical significance.It can help enterprises in transition to choose the right target businesses and formulate their diversified strategic plans with considering the market environment and their core competencies.