International Journal of Business and Management October, 2008107On the Construction and Evaluation of Power Supply Enterprise s Strategic Capability Shengming Hou Business Administration School, North China Electric Power University, Beijing 102206, China E-mail: kangwei63yahoo.cn Abstract It is extremely important to make a scientific evaluation on enterprise s strategic capability. Focusing on the power supply enterprise, this paper designs a “ five-force” mode composed by strategic capabilities and advances a complete strategic capability evaluation system. In addition, this paper proves the system s feasibility and practicability by case study. To sum up, this paper provides with an effective method for the evaluation of power supply enterprise s strategic capability. Keywords: Strategic capability, Power supply enterprise, Analytic hierarchy process (AHP) 1. Introduction In enterprise management, in order to adapt to changes of environment and allocate resources effectively and obtain better effects, to possess stronger strategic capability is an indispensable factor for the enterprise. The study of enterprise s strategic capability evaluation can help the enterprise evaluate its strengths more exactly and comprehensively. Understand its advantages and disadvantages. Develop the advantages and improve the disadvantages. Enhance the strengths from all aspects instead of one aspect. Finally realize the enterprise s long-term coordinative development and sustain its initiatives in competition in the long run. As a result, the enterprise can obtain better corporate performance. Therefore, the exact evaluation of enterprise s strategic capability serves as the base of management, which provides with a relatively real and reliable basis for managers in making decision. 2. The connotation of strategic capability For an enterprise in its whole development process, as the enterprise can make up relevant enterprise strategy, implement relevant strategic management methods, and guarantee an effective application of enterprise strategy, the enterprise possesses strategic capability. The cultivation and utilization of enterprise s strategic capability are the sufficient conditions for the enterprise creating sustainable competitive advantages and the key ensuring the enterprise s sustainable development (Wensong Zhang, 2005; Xiaoping Xu & Wei Liu, 2006). Differing from common industrial enterprises, the power supply enterprise is a special enterprise that aims at transferring, distributing, and selling electricity. Its production and operation have unique characteristics and follow special laws. Based on the enterprise s strategic capability discussed above and the operational characteristics of power grid enterprise, we conclude the features of power supply enterprise s strategic capability as follow: (1) Regionalism As a kind of natural monopoly industry, the main business operation of power supply enterprise is to transfer, distribute, and sell electricity. Its operation is affected apparently by the region. The economic and social development of the city where the power supply enterprise locates determines its development rate and scale to a great degree. (2) Comparability In order to study the power supply enterprise s strategic capability, we can compare the present strategic capability with the former strategic capability or make comparison in the same industry, find out the gap, explore the reasons for the increase of decrease of strategic capability, and make progresses from one aspect or several aspects. On the other hand, we can compare the power supply enterprise with others in the same industry, position the power supply enterprise and make it learn from the excellent enterprises in the industry. (3) Dynamic character The dynamic character of power supply enterprise s strategic capability means the strategic capability changes along with the changes of market structure and competition behaviours, and the changes of enterprise s organizational structure. In other words, the advantages or disadvantages of the enterprise are not eternal. Vol. 3, No. 10 International Journal of Business and Management 108(4) Integrity The strategic capability is the product of enterprise resource allocation as well as the product of integrating enterprise s business system and management system. The lack of any necessary resource or the imperfect integration of certain ring in systems will affect the cultivation and construction of strategic capability. (5) Process character The cultivation, construction, development, and declination of power supply enterprise s strategic capability need a process. As the power supply enterprise carries out its strategy, what the strategic capability focuses on is different at different stages. Therefore, the power supply enterprise should completely realiz