Most of big engineering companies in Korea are confronted with serious threat in management due to drastic decrease of project order and price war especially after IMF crisis. As a way of restructuring, most of Korean big engineering companies were merged or acquired by big construction companies. Under this situation, it is very urgent for engineering companies to alleviate their competences so as to survive.
So, this thesis investigates what the competence of engineering companies are and what the prospect of new businesses as a breakthrough is. In order to execute this investigation, a case study of A engineering company which is one of Korean big engineering companies is performed.
Firstly, for competence analysis, A engineering's business is divided into 3 business areas - process centered engineering, facility centered engineering, and construction centered engineering. To each business area is value chain analysis applied. As the result of this analysis, process centered engineering business area is proved to have competence and construction centered engineering business area not to have competence.
Secondly, for determining whether new businesses are prosperous, diversification theory is introduced. refinery and gas plant project in process centered engineering business are and civil engineering project in construction engineering business area are new businesses in A engineering company.
As the result of applying diversification theory to new businesses, new business included in the business area which has competence can be performed mainly on internal resources. On the other hand, new business included in the business are which has not competence can not be performed only on internal resources.
So, A engineering company can perform Refinery and Gas plant project with internal resources of process centered engineering business. But A engineering company can't perform civil engineering project with internal resources. If A engineering company wants to perform civil engineering project, it should consider merger & acquisition with professional company of civil engineering area.
Most of all, through this case study, business diversification in engineering company should be performed on the basis of internal competence and resources. If a engineering company wants to expand its business area toward the business which is not related to internal competence and resources, it should consider merger & acquisition of professional company with new business area.