Abstract
Supply chain management (SCM) plays an important role in international work distribution mechanisms. This phenomenon has shifted to an SCM-to-SCM competition rather than corporate-to-corporate competition in the global market. Apple and Samsung Electronics are the two major global information and communications technology (ICT) companies, each choosing different SCM strategies to stabilize production while minimizing inventory and maintaining ongoing partnerships with suppliers. To analyze the relationship between strategic differences in SCM structure of the ICT companies and capital, while employing the generalized method of moments, this study analyzed partnerships with suppliers from a financial perspective for long-term growth and stable production. Results identified that the target debt ratio of Apple’s parts suppliers was 38%, which was slightly higher than that of US companies (33%). In the relationship between capital structure and SCM structures, the company’s debt ratio decreases if the strength of the strategic alliance and the strength of the horizontal integration of global parts suppliers are higher. Specifically, Apple’s parts suppliers with non-equity alliances, such as technological and R&D alliances, have reduced debt ratios more than companies with equity alliances. In the case of Samsung Electronics’ parts suppliers, primary vendors had a lower debt ratio than secondary vendors. These results indicates that if the strength of the vertical integration with the international strategic alliances is greater, they are more likely to adopt a lower debt ratio policy. Identifying the relationship between SCM strategic difference and capital structure, this study provides valuable insights for corporate sustainability.
Highlights
Chain management (SCM) in global information and communications technology (ICT) companies plays an important role in sustainable production, maintaining smooth product flow, from raw materials to finished product, throughout international work distribution mechanisms
The profitability ratio (EBITi,t−1 ) showed a negative correlation with the target debt ratio, which is consistent with existing studies in that a high profitability of a company increases reserve funds and that the debt ratio will decrease because the use of internal funds is uncomplicated [28]
Apple is maximizing the synergy effect through a horizontal Supply chain management (SCM) focused on a single model that allows them to provide customer value while guaranteeing large order volumes to parts suppliers
Summary
Chain management (SCM) in global information and communications technology (ICT) companies plays an important role in sustainable production, maintaining smooth product flow, from raw materials to finished product, throughout international work distribution mechanisms. Companies are increasingly reliant on supply chains while concentrating on a small number of core capabilities [1,2,3]. This phenomenon has recently shifted to an SCM-to-SCM competition rather than corporate-tocorporate competition [3,4]. Apple and Samsung Electronics are the two major global companies, each choosing different SCM strategies to stabilize production while minimizing inventory and maintaining ongoing partnerships with suppliers [1]. Apple is considering the lifecycle of its products and exhausting the inventory of its existing products by identifying the logistics thereof, in real time, before the next-generation products are released. According to Apple’s Annual Report [5], the parts (display) are secured for sufficient inventory, using the economies of scale from the logistics, to achieve a yield
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