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The study focuses on passive component industry, which is often regarded as standardized commodity. Passive component industry is capital intensive and volatile to economic cycles. Price raises due to shortage, and price drops due to over-supply. Meanwhile, due to high capital requirement, the market is oligopolistic. With the characters of the industry, the study will explore the business and operation strategies and the financial performance.
The study selects Murata, TDK, Taiyo Yuden, Vishay, Yageo, Chilisin and PSA as study companies. The companies are headquartered in Japan, US and Taiwan respectively. The study period is across year 2011 to 2020, and is based on public financial information, using DuPont analysis as framework and made reference to relevant academic studies.
The operation strategies have direct impacts over revenue growth, profitability and the return to shareholders. When passive component dividing into high-end and mid-to-low end markets, Taiwan study companies deliver excellent financial performance with their proactive investment in capacity. Similar outcome to disruptive innovation.
Besides, Murata applying Kyoto style of business operation. Kyoto style of business operation emphasizes technology capability, profitability, and asset turnover, but applies much less on financial leverage. Kyoto style of business operation therefore enjoys the benefit of lower financial risk and is better resist economic cycles.
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