Lappeenranta University of Technology Core
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LAPPEENRANTA UNIVERSITY OF TECHNOLOGY Department of Industrial Engineering and Management International Operations and Marketing CORE COMPETENCE OF A SMALL OR MEDIUM SIZED CONTENT PROVIDING COMPANY OPERATING IN THE INFORMATION AND COMMUNICATION TECHNOLOGIES SECTOR The subject of the thesis has been approved by the Departmental Council of the Department of Industrial Engineering and Management on the 15th of December 2004. Examiners and instructors: 1. Professor Markku Tuominen 2. Professor Veli-Matti Virolainen Lappeenranta, December 7, 2004 Jukka Niiranen Katajasaarenkatu 6 A 16, FIN - 53900 LAPPEENRANTA Tel: +358 (0)40 5028201 ABSTRACT Author: Jukka Niiranen Title: Core Competence of a Small or Medium Sized Content Providing Company Operating in the Information and Communication Technologies Sector Department: Industrial Engineering and Management Year: 2004 Place: Lappeenranta Master’s Thesis, Lappeenranta University of Technology 79 pages, 11 figures, 7 tables, 2 appendices Examiners: professor Markku Tuominen, professor Veli-Matti Virolainen Keywords: core competence, content production, content producer company, information and communication technology The main objective of this work is to study the factors behind the core competence. How it is build up and how the companies can most effectively take advantage of their available resources through understanding of core competence. In the theory part we go through the definition of core competence and the means how companies can clarify their own core competence internally to themselves. In the empirical part we illustrate the competencies of three case-companies chosen for the qualitative study from a larger company base of a quantitative study made at the Telecom Business Research Center. Writer has acted as a co- author in the qualitative study. Gathered information from the case-companies is based on the views of the interviewees. These views are utmost relevant, because the core competence is in real-life defined by just these core players in the company. In addition one action-oriented case is presented. The study should be utilized as a tool in the company’s core competence definition process. The examples here are intended to help in the process. TIIVISTELMÄ Tekijä: Jukka Niiranen Työn nimi: Ydinosaaminen pienessä tai keskisuuressa tietoliikennetoimialalla toimivassa sisällöntuottajayrityksessä Osasto: Tuotantotalous Vuosi: 2004 Paikka: Lappeenranta Diplomityö, Lappeenrannan teknillinen yliopisto 79 sivua, 11 kuviota, 7 taulukkoa, 2 liitettä Tarkastajat: professori Markku Tuominen, professori Veli-Matti Virolainen Hakusanat: ydinosaaminen, sisällöntuotanto, sisällöntuottajayritys, tietoliikennetoimiala Tutkimuksen tavoitteena on tarkastella tekijöitä, joista ydinosaaminen muodostuu, sekä sitä kuinka yritykset voisivat parhaiten hyödyntää omia resurssejaan ja osaamistaan tunnistetun ydinosaamisen avulla. Teoria osuudessa käydään läpi kuinka ydinosaaminen on kirjallisuudessa määritelty ja miten yritykset voivat sen määritellä sisäisesti itselleen. Empiirisessä osiossa käydään läpi Telecom Business Research Centerissä tehdyn kvantitatiivisen selvityksen pohjalta valitut kolme sisällöntuottaja case - yritystä sekä kuvataan näiden osaamista. Tiedot yrityksistä perustuvat niiden edustajille tehtyihin haastatteluihin ja heidän käsitykseensä omasta yrityksestään. Tämä näkemys on tutkimuksen kannalta äärimmäisen relevanttia, koska ydinosaamisen määrittely tehdään yrityksessä sisäisesti juuri haastatellun kaltaisten yrityksen ydintoimijoiden toimesta. Varsinaisten case -yritysten lisäksi käydään läpi käytännön tapaus action-oriented -tutkimusosuudessa. Tutkimusta ja siinä käsiteltyjä esimerkkejä tulisi hyödyntää yrityksen oman ydinosaamisselvityksen apuna prosessin varrella. PROLOGUE This master’s thesis work has been done at the Telecom Business Research Center institute for my master’s degree from the Department of Industrial Engineering and Management at the Lappeenranta University of Technology. Professor Veli-Matti Virolainen, whom I would like to thank greatly, has extremely patiently supervised the work. My warmest thanks go also to my wife Hanna, to the former director of TBRC professor Jarmo Partanen and to dean of the Industrial Engineering and Management department professor Markku Tuominen. When reading, please keep in mind that the text has been written during 2000- 2001, although the Master’s Thesis was published in the end of 2004. Lappeenranta, December 7, 2004 Jukka Niiranen TABLE OF CONTENTS: 1. INTRODUCTION....................................................................................1 1.1. Background of the study ................................................................2 1.2. Objectives and content of the study ...............................................4 1.3. Research approach, methodology and methods............................5 1.4. Definitions and limitations of the study...........................................7 1.4.1. Focus on SMEs .................................................................8 1.4.2. Content production ............................................................8 1.4.3. Limitations .......................................................................10 1.5. Current situation in the society.....................................................10 2. CONCEPTUAL DISCUSSION OF CORE COMPETENCE..................12 2.1. Management of core competence................................................16 2.2. Utilization of core competence .....................................................18 2.3. Past views of core competence ...................................................19 2.4. Recognizing one’s core competence ...........................................20 2.5. Decision making...........................................................................24 2.6. Core competence in content business .........................................27 3. CONTENT BUSINESS AND INFORMATION TECHNOLOGY............28 3.1. Past technological development ..................................................29 3.2. Expectations to the near future ....................................................31 3.3. Technological challenges.............................................................32 3.3.1. Packet switched networks ...............................................32 3.3.2. Mobile solutions...............................................................33 3.4. Mix and match..............................................................................37 3.5. Bandwidth ....................................................................................39 3.6. Very close range technologies .....................................................41 3.7. What about the actual content then?............................................44 4. CASE STUDY ......................................................................................45 4.1. Background..................................................................................45 4.2. The quantitative questionnaire .....................................................47 4.2.1. Preparation of the questionnaire......................................47 4.2.2. Goals of the questionnaire...............................................48 4.2.3. Classification of the companies according to their products’ characteristics...............................................................49 4.2.4. Core competence in quantitative questionnaire...............51 4.2.5. Choosing the companies for qualitative interviews ..........53 4.3. Case company; Firm-1.................................................................54 4.4. Case company; Firm-2.................................................................56 4.5. Case company; Firm-3.................................................................58 4.6. Case: Infoscreen..........................................................................60 4.6.1. Action-oriented approach ................................................60 4.6.2. Description of the system ................................................62 4.6.3. Problems with the implementation...................................67 4.6.4. Lessons learned ..............................................................69 4.7. Core competence in the case companies ....................................70 4.8. Future needs of the case companies concerning core competence..........................................................................................72 5. DISCUSSION .......................................................................................74 6. CONCLUSION .....................................................................................78 REFERENCES APPENDIXES LIST OF FIGURES AND TABLES Figure 1: Core competence building blocks. Adopted from (Javidan, 1998). ........14 Figure 2: The five steps of core competence ........................................................18 Figure 3: Causal relationship between core competence, competitive advantage and added value. ..................................................................................................22 Figure 4: Expected development in available mobile bandwidth in next few years .....................................................................................................................40 Figure 5: Illustration of the idea and the relations between the global, local and Very-local service networks. .................................................................................42 Figure 6: Distribution of companies