| Summary: | 碩士 === 國立雲林科技大學 === 企業管理技術研究所 === 87 === The Case Study of Conglomerate, Diversification Strategy
－From Traditional to High -Tech Industry
Student: Ching-Chi Tseng Advising Professor: Hui-Yun Yu , Ph.D.
Institute of Business and Administration
National Yunlin University of Science and Technology
Abstract
Enterprise groups have always enjoyed greater resources than non-group enterprise; from financial resources to personnel and even the development of certain core resources, groups can use the foundation of their greater resources to integrate themselves and to ensure profit for each internal unit of the group. As a result, in Taiwan area, the majority of such business groups have traditional manufacturing as their competency-base. In traditional manufacturing industry, there is a relatively low concentration of technology, a high concentration of labor, and low business environment uncertainly. These different characteristic between high tech and traditional manufacturing industries might affect the decision making and future management policy for such traditional enterprise group investing in high technology industries.
By using group diversification and strategic management theory , this thesis try to explore the investment strategies and development of such groups in high technology. Four case studies are presented and analyzed, and findings and suggestions presented as summarized below:
(1) Ideas and Motivations for Groups to Invest in High Tech Businesses
The idea for traditional groups to diversify into high tech business comes majority from outside recommendations and internal promotion. The motivations for such investment are chiefly growth and financial consideration. From the perspective of synergy consideration, the motivation is to raise the rate of use present financial resources; other factors relating to overall efficiency are less developed.
(2) Influential Factors of Group Diversification to Invest in High Tech Businesses
Overall Factors
Group decision to invest in high tech businesses are influenced by outside factors, such as the overall economic environment of production and internal factors, such as the group''s resources and capabilities.
Factors related to Financial & Technological Resources and Risk Consideration
Relatively larger-scale groups which pursue aggressive investment tend to invest in IC upstream production, with its greater level of technology and financial requirements. Conservative groups go for downstream IC production which requires less technology and has less stringent financial requirements. The smaller scale groups invest in downstream IC production because of the lower technological and financial requirements.
Factors related to Group Unique Strengths
If the original group owned the downstream diversification & logistic place strengths, the investment choice will be for the IC downstream manufacturing field; if the firm has large-scale production advantages, it will choose large-scale upstream IC manufacturing fields in order to bring its advantages into full play and be competitive in the IC business.
(3) Entry Strategies for Groups Investing in High Tech Business
Traditional groups entering high tech businesses mainly use creative investing and staged entry as a strategies.
(4) Headquarters Control Model for New Businesses
The business control model of the group headquarters for new businesses and degree of intrusiveness can be divided into high involvement and low involvement. The high involvement model groups use concentrated control or strategic planning control style, it''s a difficult and complex coordinate model, but it is easy to stragetically adjust overly high operation costs, and where the new business is totally controlled. At appropriate times, the group assists in the development of the new business. Low involvement model business groups use financial controls or strategic controls as a management style, It''s a simple coordinate model , By using this style, new business has a high degree of autonomy with regard to responding to changes in technology and market strategy, but there exists a risk to the group in that the new business is difficult to control.
(5) New High Tech Businesses
Development of New Business Organization
The development phase can be divided into (1) the incubation period; (2) the seed period and (3) the business organization period. In large-scale groups this process is overseen by a standing group and is directly under high policymakers; the important leaders of the future new business also come out of this group. Small scale groups do not have this capability. During the seed stage, the organization establishes a work group, task force or committee or similar temporary organization, and formal company operations are established as the new business develops.
Human Resource Development and Group Resource Operations in New Business
The Human Resource development in most large-scale groups based on the strategy of "managerial talent is allocated within the group; technical talent is contracted from outside". Internal adjustment of human resources causes concern that the human resources of the mother corporation are becoming thinner as a result, and so may be controlled. Small scale groups, due to their lack of human resources support, depend on contracting talent from outside for all their personnel needs. In terms of contracting technical talent, large-scale groups use their reputation, salary incentives, stock options, the lure of high positions, and the challenge and scope for development in a new company as the major attractions for outside talent. Such groups are at an advantage over other groups which do not have such a considerable business reputation.
The Needed Management System for New Developed Business
Large-scale groups are better than smaller groups at making best use of the group''s advantages to support new business development. They also make good use of the original group''s managerial system and experience with the aim of reaching the optimal efficiency for the entire group. Those subsidiaries who experience a high involvement control from the mother company are more likely than those with low involvement to benefit from the group''s internal managerial systems and experience, to reach the goal of obtaining complete control.
Traditional group which invested in high tech businesses uses the original group management systems. If the original organization''s technical and market related systems are used, there is the concern that these will not suit the new enterprise; indeed, such systems could have a negative effect on the development of the new high tech business, and should be appropriately adjusted and changed.
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