A Study on the Competitive Advantage building Via Merger and Acquisition in Passive Component Industry—The case of YAGEO
Date Issued
2011
Date
2011
Author(s)
Chiu, Huang-Chieh
Abstract
Taking the case of Yageo’s Acquisition of Philips Passive Component Division as the research object, this study intends to evaluate the effectiveness of this acquisition strategy from Hills & Jones(2007)’s strategic planning perspective and explore the key success factors of the acquisitions in the passive component industry. Base on the existing literature, this study includes 4 analysis processes: external analysis, internal analysis, SWOT strategy, and the definition of key success factors. The main findings are as follows:
1. Regarding the external competitive environment, the barriers to entry in the passive component industry is low, and numbers of firms exist. The degree of product standardization is high. While the business cycle occurs, and the demand and supply cannot match, price war happens. Therefore, in the long-term, only big firms which can adjust the stock and small firms which have its own niche market would survive.
2. With respect to the internal managerial environment, Yageo accumulated resources of technology development from the past experiences, which also brought the advantages of cost control. In this acquisition cases, Yageo aimed for Philips ‘development skill and distribution channels to explore its market niche, in order to create the barriers to entry.
3. From Piercy & Giles(1989)’s SWOT strategic view, this acquisition is the strengthen strategy(WO strategy), which minimizes their weakness in order to grasp the opportunity of the external environment.
4. The key success factors of this acquisition cases are: (1) the both goals of parties in this acquisition case are clear; (2) Yageo has successful acquisition experiences in the past; (3) Yageo’s overall strategy is in the right direction; (4)this acquisitions builds its integrated supply chain system; (5)Yageo has complete production management skill
According to the research finding, this study suggests that managers in the passive component industry, should develop their own strategic direction first, and expand their business on this path, in order to enhance their overall performance.
Subjects
passive component
merger and acquisition
key success factors
strategy
Type
thesis
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