A Study On Core Competence Development In Related Diversification Of Private Enterprises

How to be successful in related diversification is often an unavoidable issue facing private enterprises. Quite an amount of researches have demonstrated that a development of core competence in new business by sharing authentic core competence is critical for the success of related diversification.By employing the theories of organizational learning and core competence, this dissertation discusses three issues facing the private enterprises: pattern of diversification; how to develop core competence in new business by sharing authentic core competence; the supporting factors of core competence development in new business. The first three chapters provide the schema of this study, the supporting theories and current situation of related diversification in China. The author holds that core competence of new business should be cultivated on basis of sharing authentic core competence in the private enterprises while organizational learning is critical in the process of core competence development. There are three stages during developing core competence of new business of which are all with different characteristics and tasks. Organizational learning methods can be categorized as four types according to their learning sources and aims. Chapter 4 tends to integrate different types of organizational learning methods to the three stages of core competence development in new business. Furthermore, a discussion is conducted on the functions of various organizational learning methods during development of such core competence.Chapter 5 detailedly analyzes how private enterprises develop new core competence through sharing their authentic core competence. The fact of sharing core competence is sharing implicit knowledge, so some related theories of implicit knowledge will be introduced. Moreover, in this chapter, the author has made an effort to integrate sharing relationships between different divisions and industry clusters by building a model of core competence development in new business. In this model, six factors are introduced with their specific focuses during the process of breeding core competence. Many factors play important roles during the process of core competence development, especially human resource management, corporate culture, innovation mechanism, organizational structure, network information system and learning organization. Chapter 6 analyzes the supporting functions of these six factors in the development of core competence in new business in related diversification.Finally, a case study of how and why Midea Group succeeds in related diversification is introduced. Some suggestions will be given on basis of the above studies for this famous private enterprise on its way to further related diversification.