Facing Challenges

Chi Schive

April 16, 2001

Taipei

• Globalization World trade has been expanding much faster than world production

• Weightless Production Technology The quickly developed IT technology has changed the way of manufacturing and doing business.

Changing Environment

Merge: An Industrial Reorganization

• Merge Waves of the U.S. Economy

• Merger in the Financial Sector

Merge History in the U.S.

1989-1910, Merge for Monopoly 1. 15% of plants and employment involved. 2. U.S. Steel came from emerging 785

plants--combination of combinations. 3. Standard Oil acquired 20 of 25 refineries in the Cleveland area.

• 1923-1931, Merger for Oligopoly

The formation of GM

2,750 utility companies, 43% of total, were merged.• 1960-70’s, Merger for Growth

The market boom encouraged inter-industry merger.

• 1980’s and After, Merger for Growth, Diversification and Conglomeration

Merge caused by deregulations

continued

Merge in the U.S. Financial Market

• Riegle-Neal Interstate and Branching Efficiency Act of 1994

• Financial Services Competitiveness Act of 1995

Merge in the U.S. Financial Sector• Chemical Bank and Manufacturers Hanover

Trust Chemical Bank

• Bank of America and Security Pacific Bank of America

• Chemical Bank and Chase Manhattan Chase Manhattan

• Citi Corp. and Travelers Group Citi Corp.

• Bank of America and National Bank Bank of America

Performance After Merger

• About one-third of all mergers failed.

• Benefits of recent financial mergers are yet to be seen.

• Merger initiated from outsiders, such as banks, tends to be less satisfactory.

• Should merger for survival be given a different thoughts?

Knowledge, Innovations and Integration

• Innovation deals with problem solving.

• The capability of solving problem is related to the stock of knowledge held and the capability of using that knowledge.

• Knowledge comes from experience, the publicly available information and some uncodified characteristics and tacitness of innovators.

From Industry to Technology Paradigm

• The Boundary of Industry Turning Blur

• Technology Paradigm, An New Way of Thinking Industrial Development

Examples of new products and services

Health and welfare Home care, care equipment, home health,telemedicine, advanced medical equipment

Culture and family life support Community business, continuing education, leisuretravel, apparel

Information and communicationstechnology

E-commerce, content, GIS (geographicalinformation systems), electronic government

New manufacturing technologies Next-generation new materials, advancedproduction control robots, maintenance-freeequipment

Distribution and transport Internet mail order, third-party logistics (3PL),distribution information services

Environment Low-pollution vehicles, recycling, environmentalequipment, environmental creation and restoration

Business support Outsourcing, authorization business, solutionsbusiness

Marine business Mega-float project (ultra-large floating structures),fishing industry infrastructure

Source: Nomura Research Institute, from Review of the “Action Plan for Economic Reform”, Ministry of International Trade and Industry, March 1998.

Fifteen New Growing Area, Japan (1995)

Examples of new products and services

Biotechnology Pharmaceuticals, food, chemicals,energy/environment

Urban environmental facilities New traffic systems, cable burying

Aerospace (private demand) Next-generation aircraft, hub airports, testing aircraftlimits

New sources of energy and energyconservation

Solar energy, wind energy, waste-to-energy systems,clean energy, energy service companies (ESCOs)

Human resources Temp staffing, vocational training, recruitmentagencies

Internationalization International transport, foreign companies,international business consulting, support forexpatriates

Housing Renovation, previously owned housing market, newbuilding materials

Source: Nomura Research Institute, from Review of the “Action Plan for Economic Reform”, Ministry of International Trade and Industry, March 1998 .

Fifteen New Growing Area, Japan (1995)

Technology Paradigm

Technology paradigm affected by three elements: l. Certain needs to be fulfilled. 2. Some scientific principles to be applied for that task. 3.Certain supportive or material technology to be used.