This thesis presents a descriptive case analysis on the integration of technology and business strategy in the multimedia industry. It analyses two Korean companies in the industry; Dooin Electronics Company in the MPEG board industry and Samsung Electronics Company in the MPEG-1 chip industry. To investigate practical methods of integration, a research framework is proposed based on the literature on multimedia industry, information technology industry, and technological innovations. Methods of integration are observed for each business activity from the aspects of organization, process, and corporate systems.
Because multimedia industry has recently emerged as a result of fundamental changes such as digital convergence and deregulation in communication and broadcasting sectors, it shows peculiar characteristics compared to other stable industries. They are such as high uncertainty, high speed of change, and composite changes in technology and market. So this thesis discusses five issues starting from the characteristics of the industry and ending to the difference in the methods of integration of technology and business caused by industrial differences and organizational differences.
First, it compares industry structure and technological characteristics in each sub-industry; MPEG board industry and MPEG-1 chip industry. MPEG board industry shows downstream characteristics even though its major customers consist of PC manufacturers. Technological changes come from competition over customization of application software and from the changes in neighboring industries such as PC, microprocessor, and graphics. MPEG title plays a critical role in the growth of demand. And its domain of business is blurred by the integration of MPEG decoding function with traditional PC graphics, PC sound and PC MODEM functions. MPEG chip industry shows upstream characteristics because MPEG-1 chip is an industrial product used in MPEG board and other multimedia user platforms. Technological changes come from the change of MPEG international standards, and major uncertainties lie at the forefront activities in the business model such as timing of the business initiation.
Second, the thesis looks for mechanisms for creating market opportunities in each sub-industry. In the MPEG board industry, market opportunity was created by standardization of MPEG and by commercialization of MPEG chips. Multimedia PC triggered integrating video functions with PC. In MPEG-1 chip industry, market opportunity was created by standardization of MPEG-1 and market acceptance of MPEG-1 as a digital video storage technology on CD-ROM in PC.
Third, it investigates methods of integration of technology and business. In the MPEG board company case, the integration has been led by its top management. It shows integration by workforce reallocation in which senior engineers become managers of business activities such as sales, and junior engineers become technical salesmen. An outstanding integration mechanism shows up in the new product development process and information systems. In the MPEG-1 chip company case, the degree of integration is lower than that in the MPEG board company case, because the company is much larger than the other. Integration is obvious especially in the new product development process.
Fourth, it discusses differences in the integration methods by industrial sectors and company sizes. Different sectors need different integration methods because uncertainty profiles lie at different business activities, and because different technological characteristics and competitive environments need different organizational structures and processes. The company size is a key determinant of the integration methods because the integration can be intrinsically easier in smaller companies.
Fifth, it proposes effects of the integration from a qualitative perspective. Flexibility during the changes of product specification, agility in customization and change of specification, competitive advantages by product variety, synergy between technology and business, strategic focus in exploiting corporate resources, and strong corporate culture are presented as some of the major effects of such integration.
