S. David Young and F. O¡¦Byren (2000) divided the economic value added (EVA) into two parts, current operating value (COV) and future growth value (FGV). From financial markets, it was found out that the fluctuations of stock prices of businesses were mainly based on the expectation of the investors to the operation performance and future growth of the businesses. Hence, the businesses can create higher market value only their substantial growth rate exceeds expected growth rate from the market.
This study adopts O¡¦Byren¡¦s theory (2000) to do the empirical case study of IC design industry in Taiwan. Firstly, the relationship between future growth value of business and their long term equity input rate (LTEI/IC), net operating profit after tax (NOPAT(G)%), Gross Profit/OE were examined. Secondly, by paradigm empirical case study, this study tries to find out the relationship between the factors that affect future growth value of business and the innovation strategy. Thirdly, this study tries to figure out recommendations for the business to enhance its future growth value.
This study finds out the factors that affect the future growth value (FGV), in stock market, of business of IC design industry in Taiwan. The investors focus on NOPAT(G)% for on-growing businesses; they focus on continuous growth of Gross Profit/OE for expanding businesses; and they focus on higher expectation of investment performance from LTEI/IC for mature business sectors.
In addition, the results of this empirical study of investors¡¦ expectation on the growth of MediaTek Inc. are as follows:
1. Its Gross Profit/OE and NOPAT(G)% are obviously superior to the other sample business sectors.
2. There is positive correlation between Gross Profit/OE and NOPAT(G)% for killer applications (high market-share products) resulted from applying disruptive innovation strategy.
In conclusion, this study provides some recommendations for the businesses pursuing incremental growth or constant growth, as below:
1. Competition strategy decision: To take the innovation strategy in accordance with the performance and specification of the products, target customers and business models.
2. Effective cost control: Continuous improvements by innovative concepts and managements to reduce the costs in marketing, R&D, management, risk from material acquiring, yield rate and operation costs, etc.
3. Profit maximization: It is the key for business success and profit to apply correct innovation strategy as well as effective cost management.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0726108-112823 |
| Date | 26 July 2008 |
| Creators | Chu, Ling-jung |
| Contributors | David Shyu, Huang, Jen-Jsung, Lo, Henry Y. |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0726108-112823 |
| Rights | not_available, Copyright information available at source archive |
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