Research On The Vertical Integration Of YS Company

Since 2010, smartphone manufacturers such as industry leader Apple have fueled the global growth of the smartphone industry. The increasing growth in smart phone production has driven the market demand for small and medium-size capacitive touch screens. According to the research report, Display Search 2011 Touch Panel Market Analysis Report, released by Display Search in July 2011, in 2011 the global output value of capacitive touch screen industry reached 13.4 billion U.S. dollars; in 2017 the output value is expected to reach USD$23.9 billion; over the next six years, the Compound Annual Growth Rate (CAGR) will exceed 10%. Due to the potential development opportunities in the capacitive touch screen industry, many capacitive touch screen upstream and downstream companies have entered the capacitive touch screen industry. The original capacitive touch screen companies have also expanded production scale, which has increased competition in the capacitive touch screen industry. In this wave of development in the capacitive touch screen industry, many small and medium-size display manufacturers expect to achieve rapid development and growth through vertical integration of the industry chain, thus enhancing their competitiveness in terms of technology, efficiency, and size, and seizing this technology change opportunity.YS Electronics is a manufacturer of small and medium-size LCD modules. In order to seize business opportunities and achieve leapfrog development, YS electronics started adopting integration strategies by beginning to develop upstream small and medium size display modules, which are mobile phone touch screens and mobile phone Windows Protection covers. Through integration of industry chain resources, YS Electronics strives to become a one-stop solutions provider for mobile phone touch screens.There are proven theoretical models in the analysis of enterprise integration strategy, but these models tend to stay at the level of theoretical studies. Some theoretically feasible integration strategies will not necessarily bring good results, as there are many more specific problems during the implementation of integration strategies but very few people study these specific issues. For example, when such enterprises implement vertical integration strategies to invest in new projects, they either create a new project on their own or acquire a company with an existing mature project. Through these two ways, companies enter the downstream industry. This paper addresses such questions as:1) should integration be done through new projects or acquisitions?; 2) what are the varied results of these two methods?; and 3) why sometimes after integration does actual performance not improve, with production costs not decreasing but actually increasing? This is the research focus of this article.In this paper, YS Electronics is taken as an example in the capacitive touch screen industry. This paper reviews the academic literature on the strategic analysis and research-based integration theory. It also studies the development of and competition within the capacitive touch screen electronics industry, of which YS Electronics is a part. First, through strategic analysis, this report comments on how YS Electronics should be implementing its vertical integration strategy. Then it compares YS Electronics’performance after vertical integration with other similar companies in the industry. By analyzing the disclosed financial data from the two publically listed companies, and comparing the growth rate, earnings per share, net sales, it draws the conclusion that the results of YS Electronics are not good. Then this report analyzes the causes for the inconsistency of the actual and the anticipated financial performance after YS electronics’vertical integration.After collecting and compiling data analysis on YS Electronics’business, this paper argues that YS Electronics vertical integration strategy is not wrong, but there are many problems in the process of implementing the strategy, which is the main cause of the decline in the performance of its integration. Our analysis uncovers how YS Electronics’integration strategies in investment, industrial organization, supply chain, technology and management have made significant impacts on the company’s business performance. It also compares similarities and differences in specific implementations of vertical integration and shows how these lead to varying integration effects.This article attempts to explain during the rapid development of industry and ever-changing technological environment, why some companies in the implementation of the carefully drafted vertical integration strategy not only failed to make the business into the fast track of development, but were dragged into the quagmire of a dilemma. How to avoid stepping into the vertical integration of enterprises trap? The paper, taking YS Electronics as an example, makes a thorough analysis of issues during vertical integration implementation, and it gives advice on subsequent adjustment. It provides a reference for YS Electronics or similar industry managers who need to adjust their business strategy and re-implement vertical integration.