Full Vertical Integration to Maximize Profitability In Secondary Battery for xEV Industry

Sam Jon,Jung Ho Kim 한국전략경영학회 2013 한국전략경영학회 학술대회발표논문집 Vol.2013 No.3

Secondary Batteries for xEVs is an emerging industry with a vivid future. With rising concerns for climate change, global warming, and energy security, much attention have been focused on xEVs, and as xEV industry rises secondary battery for xEVs will rise respectively. By year 2030 xEV market will dominate the automotive industry. The main factors accountable for such growth are: 1. Oil price; 2. Battery price; and 3. Technology. The oil price has been on he rise, and as the oil price rises more consumers will choose xEV over internal combustion engine vehicles due to lower operational cost. A major challenge for secondary batteries for xEVs is the price. Secondary batteries in xEVs can cost as much as fifty-percent of total vehicle price. The most expensive component of secondary battery is the cell, which inhabits approximately sixty-five-percent of total battery pack price. Currently lithium-ion batteries are most commonly used in xEVs, due to their light weight, high energy density, and high voltage capacity. The price of lithium is expensive for OEMs, due to lack of purchasing power. However, as demands for xEVs rise, secondary batteries will be mass produced, giving purchasing power to lower the rate of lithium. As lithium price declines, prices of xEVs will decline, leading to higher demand of xEVs. Regarding manufacturing of secondary batteries, no set technology standards exists, leading to inefficient manufacturing process. As manufactures experience learning curve and set technology standards, it will make manufacturing process more efficient and are able to manufacture batteries at lower price. With combination of three factors, secondary batteries for xEVs will grow at rapid rate. In order for firms to gain competitive advantage within the secondary battery market the firms must utilize Vertical Integration Strategy. The paper will examine three types of vertical integration strategies: 1. Full Integration Strategy; 2. Hybrid Integration Strategy (Joing Venture); and 3. Non-Integration Strategy (Outsourcing). In the emerging stage of Secondary Battery industry Hybrid Integration and Non-Integration Strategies can be utilized; however, in order for firms to maximize profits and to gain competitive advantage Full Vertical Integration Strategy must be utilized. Full Vertical Integration Strategy will keep all stages, from cell production to battery pack assembly, within the company or group. By utilizing Full Vertical Integration, a firm will be able to create higher profit through utilizing purchasing power, efficiency, and lower cell price. Capability of lowering cell price is a critical factor in dominating the secondary batteries for xEVs market. Majority of mark-ups in battery system are consumed by cell production, while mark-ups in battery pack assembly remains minimal. With Full Vertical Integration, by keeping cell production in-house the cost of cell production will decrease; also providing the opportunity for mass production, leading to maximum profitability. The paper studied the forecast of xEVs in 2030, giving three different scenarios; 1. Slow rate growth; 2. Steady rate growth; and 3. Accelerated rate growth. The forecast utilized oil price as the main factor of growth rate of xEVs. Other factors, such as fuel cell technology and ethanol technology, were taken into account to have impact on xEV forecast; however due to fuel cell technology only being in research stage, and ethanol fuel technology not being considered as “Clean Fuel” due to process of producing ethanol fuel, such as heavy diesel-powered equipments. To conclude, this study will examine the xEV forecast and vertical integration strategy to illustrate that full vertical integration strategy is the optimum strategy to maximize profi

Spatial Market Integration of Regional Fertilizer Markets in the Philippines and Determinants

Eva Salve T,Bacud,Julieta A,Delos Reyes,Maria Angelica C,Torres,Christhaline A,Arellano 한국무역연구원 2019 The International Academy of Global Business and T Vol.15 No.1

Purpose - While several studies focusing on the integration of rice markets in order to lower prices have been conducted, little is understood about the market integration of production inputs. Price variation in production inputs, however, is also a strong factor influencing rice prices. Fertilizer is among the major inputs in rice production, implying that any change in fertilizer prices would have implications on rice prices. As fertilizer tends to register high prices and wide disparities in domestic markets, lowering its price is deemed to be effective in increasing its uptake among rice farmers. This paper attempted to answer the following research questions: (1) How closely integrated are the domestic fertilizer markets? (2) Is there price leadership, and correspondingly, are there price followers? (3) Do higher fertilizer prices exist in more segmented markets? (4) What are the determinants of price differences and market integration across regional fertilizer markets? Design/Methodology/Approach - In order to test for spatial market integration, the correlation coefficient analysis, Granger causality and the Johansen cointegration test were employed. The Johansen cointegration test was performed on 2000-2017 price series data of urea and complete fertilizer of all 16 regions in the Philippines. Findings - It was found that 95% of regional markets for urea and 81% for complete fertilizer were integrated. Rice-producing regions tended to act as price leaders, whereas regions producing less rice were price followers. Results from OLS regression analysis suggest that lower price differences tended to prevail in integrated markets and infrastructures; distance and output difference are among the determinants of market integration. Research Implications - Identifying which markets are integrated is extremely crucial in policy development as it allows the government to fast track its interventions. In integrated markets, any price fluctuation in one market is also likely to happen in another integrated market. It therefore signals to the government in which regions to focus the interventions on, especially in its efforts to stabilize the prices of rice. For instance, it could implement centralized policies in integrated fertilizer markets, and decentralized policies in less integrated ones. Having identified the determinants that influence integration should also allow the government to decide what kind of interventions to implement in order to promote the integration of spatially segregated markets.

한국의 닭고기 가격 결정 시스템 개선

김정주,강병규 한국가금학회 2008 韓國家禽學會誌 Vol.35 No.4

In Korea chicken meat price is not determined in the auction markets, but it is artificially calculated using the live chicken price of one day before, transporting cost, converting rate of live chicken into carcass, and slaughtering cost. This calculated price is published through the mass media and used as the base for chicken meat transaction. By the way, since 85% of the Korean broiler industry is composed by the integrated system, the live chicken price is nothing to do with ex-factory price of chicken meat produced by the integrators. Under this pricing system, when we estimate the margin of the chicken meat through the marketing process, the margin of the integrator is fluctuated by the live chicken price of one day before, which is nothing to do with integrators; When the live chicken price is low, the margin of the integrators is low, but the margin of the selling agencies' is relatively high. On the contrast, when the live chicken price is high, the margin of the integrators is high, but the selling agencies' margin will be relatively low, because consumer's price could not be increased in parallel with increase of the live chicken price. Accordingly, the ex-factory price of chicken meat determined using the production cost of live chicken and slaughtering cost of the integrator by adding resonable margin of the integrator should be determined and published, so that it could be used for chicken meat transaction. In Japan the Zen-Noh Chicken Foods Corporation announce the ideal piece of chicken every morning, and all the transactions of the chicken meat will be determined based on this price. In Korea, it will be desirable to make bench marking from Japanese case, in other words the NH could announce the ideal price of chicken meat every morning, so that it would be the base price of chicken meat transaction. Even though the market share of the NH is less than 5%, its publicity should be accepted, since it is a subsidiary of the National Agricultural Cooperative Federation of Korea. In Korea chicken meat price is not determined in the auction markets, but it is artificially calculated using the live chicken price of one day before, transporting cost, converting rate of live chicken into carcass, and slaughtering cost. This calculated price is published through the mass media and used as the base for chicken meat transaction. By the way, since 85% of the Korean broiler industry is composed by the integrated system, the live chicken price is nothing to do with ex-factory price of chicken meat produced by the integrators. Under this pricing system, when we estimate the margin of the chicken meat through the marketing process, the margin of the integrator is fluctuated by the live chicken price of one day before, which is nothing to do with integrators; When the live chicken price is low, the margin of the integrators is low, but the margin of the selling agencies' is relatively high. On the contrast, when the live chicken price is high, the margin of the integrators is high, but the selling agencies' margin will be relatively low, because consumer's price could not be increased in parallel with increase of the live chicken price. Accordingly, the ex-factory price of chicken meat determined using the production cost of live chicken and slaughtering cost of the integrator by adding resonable margin of the integrator should be determined and published, so that it could be used for chicken meat transaction. In Japan the Zen-Noh Chicken Foods Corporation announce the ideal piece of chicken every morning, and all the transactions of the chicken meat will be determined based on this price. In Korea, it will be desirable to make bench marking from Japanese case, in other words the NH could announce the ideal price of chicken meat every morning, so that it would be the base price of chicken meat transaction. Even though the market share of the NH is less than 5%, its publicity should be accepted, since it is a subsidiary of the National Agricultural Cooperative Federation of Korea.

청주시 행정구역 통합이전과 이후의 근린상가 매매가격 변화에 관한 연구

전형하(Jeon, Hyeong Ha),정재호(Chung, Jae Ho) 한국주거환경학회 2020 주거환경(한국주거환경학회논문집) Vol.18 No.2

The purpose of this study was to indentify the changes in neighborhood commercial building before and after the integration of Cheongju City. The study examines and anaiyzes how the neighborhood commercial building price affects and what variables affect the price decision factor. The multiple regression analysis method was used to identify and build characteristic variables that affect the price model of nearby shopping malls before and after the integration. Statistical program for the analysis of the constructed model was analysed using SPSS 23.0. The results of this study identified the variables that had the greatest effect on the neighborhood commercial building price before and after the integration. 1) Before the integration of Cheongju City, the expansive side was shown as a variable of the number of years of trading in the floor. 2) After the integration of Cheongju City, the vast variables, the floor level, the distance from Hyundai Department Store, and the reorganization from Cheongwon-gun to Heungdeok-gu appeared as important variables. The important variables in common before and after the integration of Cheongju City were the vast side and the corresponding floor. We reviewed and analyzed what variables affect pricing factors. Factor variables are land characteristics. The model was classified into building characteristics, location characteristics, administrative district characteristics, and yearly trading characteristics, and analyzed using the Hedonic Price Model.

Transmission of World Prices to the Vietnamese Economy

( Philip Abbott ),( Ce Wu ),( Finn Tarp ) 세종대학교 경제통합연구소 2014 Journal of Economic Integration Vol.29 No.4

International economic integration has been a central policy goal for the Vietnam government since the doi moi reform was initiated in 1986. We explore the Vietnamese increasing integration into the world market and bouts of high inflation. Five price transmission models using three levels of sectoral aggregation, examine the transmission of world price shocks to the Vietnamese domestic market and the impact of inflation on domestic prices from 1999 to 2008. Empirical results find wide sectoral variation, imperfect price transmission, non-neutral inflation pass-through, the dominant effect of inflation on domestic prices, and a low speed of adjustment to the Law of One Price. We conclude that policy analysts need disaggregated sector-level price transmission elasticities for accurate trade policy analysis and that careful attention must be paid to how inflation influences the economy. Moreover, while tariff reforms have typically been focused in many studies to come to grips with policy outcomes, the key to such understanding should be more associated with institutional reforms, market access, and incentives for foreign investment.

Co-integration and Causality Analysis among Major Black gram Markets in Andhra Pradesh, India

Kumar, K. Nirmal Ravi Korean Society of Food and Agricultural Informatio 2021 Agribusiness and Information Management Vol.12 No.2

Market integration and prices in pulse crops like black gram play an important role in determining the production decisions of the farmers and diversification towards high value nutritious crops. In this context, the present study explores extent of market integration and price transmission in selected major black gram markets in Andhra Pradesh using Johansen co-integration, Vector Error Correction Model and Granger causality test. The study used monthly prices data of black gram (Rs/quintal) sourced from selected markets of Srikakulam, Krishna and Kurnool spanning January, 1990 to December, 2019. The results of the study strongly buttressed the existence of co-integration and interdependence of selected black gram markets in Andhra Pradesh. However, the speed of adjustment of the prices found to be moderate in Krishna market and quite weaker in Srikakulam market and thereby prices correct a small percentage of the disequilibrium in these markets with the greatest percentage by the external and internal forces. So, it necessitates the need for future research, to investigate the influence of external and internal factors such as market infrastructure, Government policy and self-sufficient production, product characteristics and utilization towards market integration. As there exists only unidirectional causality from Krishna to Kurnool and from Krishna to Srikakulam markets, it calls for strengthening the information technology for flow of market information regularly to help the farmers for increasing their income.

Spatial Price Competition and Vertical Contracts in the Korean Retail Gasoline Market

( Dong Hun Kim ),( Ji Yon Lee ) 한국산업조직학회 2014 한국산업조직학회 정책세미나 논문집 Vol.2014 No.1

This paper analyzes competition among service stations in the Korean gasoline market. In particular, we focus on the effects of vertical contracts and the influence of unbranded stations on equilibrium prices. Results indicate that gasoline prices for vertically integrated stations were much lower than those for independent stations. In addition, unbranded stationscharged lower prices than branded stations but also induced branded stations to price more competitively. Meanwhile, contrary to the government`s expectation, its price disclosure policy did not intensify price competition in the retail gasoline market. It is inferred that the price disclosure policy contributed to helping refiners coordinate their prices, causing an eventualincrease in retail prices.

한국 휘발유 소매시장에서의 공간 가격경쟁

김동훈 ( Dong Hun Kim ),이지연 ( Ji Yon Lee ) 한국환경경제학회·한국자원경제학회(구 한국환경경제학회) 2014 자원·환경경제연구 Vol.23 No.4

이 논문은 한국의 휘발유 시장에서 주유소 간의 경쟁에 대하여 분석하였다. 한국 휘발유 소매시장에서 균형가격 변화에 영향을 미치는 요인으로 주유소의 특성 및 정유사와 주유소간의 수직계약구조를 고려했을 뿐 아니라 공간적 차별화를 제품차별화의 방식의 일환으로 고려하여 분석을 수행하였다. 본 연구에서는 또한 2009년 5월부터 시행한 정부의 소매시장에서 주유소가격공시정책이 주유소 간 경쟁에 갖는 효과를 분석하였다. 수직통합된 주유소의 가격이독립주유소보다 낮은 것으로 나타났으며 자가폴주유소가 폴주유소에 비해 낮은 가격을 책정할뿐 아니라 인근 자가폴주유소는 폴주유소로 하여금 가격을 더 낮게 책정하도록 하는 효과가 있는 것으로 나타났다. 정부의 가격공시정책은 소매시장에서 가격경쟁을 강화시키는 방향으로 작용, 소매가격을 떨어뜨리는 것으로 나타났다. This paper analyzes competition among service stations in the Korean gasoline market. We consider spatial differentiation as a source of product differentiation as well as the characteristics of the stations and vertical contracts between refiners and retailers as factors causing changes in equilibrium prices in the Korean gasoline retail market. The effect of the government’s price disclosure policy on the retail market competition is also analyzed. Moran’s I test indicates that the prices of neighboring gas stations are spatially correlated in the market. It is also found that gasoline prices for vertically integrated stations are much lower than those for independent stations. In addition, unbranded stations charge lower prices than branded stations but also induce branded stations to price more competitively. Meanwhile, the government’s price disclosure policy did intensify price competition in the retail gasoline market. It is inferred that the price disclosure policy contributed to retailers gaining more bargain power in price negotiation with refiners, causing an eventual increase in retail prices.

Agricultural Policy Reforms and Spatial Integration of Food Grain Markets in India

MADHUSUDAN GHOSH 경제연구소 2011 Journal of Economic Development Vol.36 No.2

Applying the maximum likelihood method of co-integration, this paper examines the impact of agricultural policy reforms on spatial integration of food grain markets in India. The extent of spatial integration of food grain markets has improved during the post-reform period, as the regional markets, which were either segmented or poorly integrated during the pre-reform period, are found to be strongly integrated, and in most cases to such an extent that satisfies the relative version of the law of one price. The agricultural policy reforms undertaken by the Indian government seem to have contributed towards improving the extent of spatial integration of food grain markets. The results offer important policy implications.

Spatial Price Competition in the Korean Retail Gasoline Market

Kim, Donghun,Lee, Jiyon Korean Resource Economics Association 2014 자원·환경경제연구 Vol.23 No.4

This paper analyzes competition among service stations in the Korean gasoline market. We consider spatial differentiation as a source of product differentiation as well as the characteristics of the stations and vertical contracts between refiners and retailers as factors causing changes in equilibrium prices in the Korean gasoline retail market. The effect of the government's price disclosure policy on the retail market competition is also analyzed. Moran's I test indicates that the prices of neighboring gas stations are spatially correlated in the market. It is also found that gasoline prices for vertically integrated stations are much lower than those for independent stations. In addition, unbranded stations charge lower prices than branded stations but also induce branded stations to price more competitively. Meanwhile, the government's price disclosure policy did intensify price competition in the retail gasoline market. It is inferred that the price disclosure policy contributed to retailers gaining more bargain power in price negotiation with refiners, causing an eventual increase in retail prices.