||In this rapidly changing world, the information technology advances quickly with each passing day, and the Internet as well as communication progress and innovate continuously. Improvements in information technology, internet and communication have markedly increased a firm’s capacity to manage operations o a global scale and then facilitate the globalization and internationalization. However, under the intense pressure of competition resulted from the globalization and internationalization of enterprises, and shortening of product’s life cycle, the Taiwan TFT-LCD manufacturers globally are facing the most severe challenge ever than before.
In confronting the keen competition internationally in the operating environment, Taiwan TFT-LCD manufacturers generally adopt vertical integration strategy as responding policy. By vertical integration strategy –backward integration or forward integration or both, they expect to achieve the goal of expanding economic scale, reducing costs, and enhancing cost advantage. Moreover, they can offer client with one stop shopping service by employing complete products supply chain management. Besides, products manufacturing technology could be advanced through the cooperation of partners, and consequently the business performance would become better.
By analyzing Taiwan TFT-LCD industry, this study could therefore understand the competition situation in Taiwan TFT-LCD panel industry, and explore the motivation and vertical integration strategy employed by Taiwan TFT-LCD manufactures through in-depth interviewing key managers of Taiwan TFT-LCD manufactures. Performance evaluation was also conducted by data collecting of secondary financial reporting and in-depth interviews with target companies. Relating vertical integration strategy to market share and profitability, this study found that vertical integration strategy may enhance firm performance. Taiwan TFT-LCD manufacturers could expand economic scale, reduce costs, develop new market, increase profits earning, and therefore enhance oneself competitive advantage by successfully applying vertical integration strategy. Therefore, this study suggested some propositions about the relationship between the depth and width of vertical integration and management performance.