mgnt2510j 3boys3girls presenation silicon valley
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Discover International City Silicon Valley
Presented by 3boys3girls
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Agenda
Background information-The USA
- Silicon Valley
Successful factor of the Silicon Valley Insight and future forecast
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Background information of the USA
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Background Information of the USA
• Population: 320,489,000 The third most populous nation in the world, after China and India
• Area: 9.85 million km2
The world‘s fourth-largest country by total area
• National Language: English
• Recognized regional languages: Spanish, French, Hawaiian ,etc.
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Background Information of the USA
•GDP in 2014: USD$17,416,253million The highest in the the world
Gross domestic product (GDP) of the main industrialized and emerging countries in current prices in 2014
Gross domestic product (GDP) of the United States at current prices from 2008 to 2018
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Background Information of the USA
• GDP Contribution by sector:• Services - 79.7%• Industry - 19.1%• Agriculture - 1.12%
GDP Contribution by Sector
Service Industry Agriculture
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Background information of the Silicon Valley
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Background Information of the Silicon Valley
• Silicon Valley is a nickname for the southern portion of the San Francisco Bay Area of Northern California in the United States• Silicon Valley is one of the most educated regions in California• Located in suburb region• 50% of Whites and Asians holding at least a Bachelor degree
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Background Information of the Silicon Valley• Silicon Valley is a leading hub for high-tech innovation and development • Accounting for one-third of all of the venture capital investment in the United
StatesThousands of high technology companies are headquartered in Silicon Valley e.g. Apple Inc., eBay, Google, Intel….
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Background Information of the Silicon Valley• High-tech companies in silicon valley are growing bigger and now
accounts for one-quarter of all the employments in silicon valley (350000) (+3%)• Job growth driven primarily by computer hardware design,
information services and other high-tech industries.• Patent registrations over 6000, 8% increase from previous year.• Apple (124 billion), Microsoft (63billion) and Google(57billion) are
the top 3 valuable brands in 2014, and Tech Brands dominate the Top 25, like Facebook, which got a +74% increase.
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Background Information of the Silicon Valley
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Successful factors of the Silicon Valley
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PEST Analysis-Political
• Government type: Democracy - Political stability• Legal system - Freedom and Right - Employment Legislation• Corruption - The United States is the 17th least corrupt country in the world
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PEST Analysis- Economical
• Good entrepreneurial atmosphere• Trade Association• Increase cooperation between different companies• E.g.: Silicon Valley Leadership Group founded in 1978 by David Packard of HP
• Huge investment from the market • 2013 venture capitalists invested $33bn in US companies – more than four
times the amount invested in the entire European Union.
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PEST Analysis-Social• Strong Regional solidarity• A sense of colonial relationship with the east in the past• Stanford University take the mission to cultivate talents
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PEST Analysis-TechnologicalHigh technological knowledge of labour• Silicon Valley University• Stanford University
• Origin of the Advanced Research Projects Agency Network (ARPANET)• Origin of SLAC National Accelerator Laboratory
• San Jose State University• Information Engineering (rank no.5 in the US)
• Carnegie Mellon Silicon UniversityTechnological inventions and discoveries by university graduates
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International relationship• Academic cooperations with universities in other countries - Beijing Institute of Technology (China) - Minghsin University of Science and Technology (Taiwan)• Many multinational companies in Silicon Valley
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The Diamond Model Analysis
The Diamond
model
5. Chance
6. Government
3. Demand Condition
4. Related and
supporting
industries
2. Factor Condition
1. Firm strategy
and rivalry
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Firm Strategy and rivalry
Strategy
Adapt innovative approach in researchPatented inventions increased by 15% No. of patents registered ranked 4th in the world World's largest science and technology innovation center
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Firm Strategy and rivalry
Rivalry• Presence of Competitive Related IndustriesIntense technological exchangesImproved qualityConglomeration • Smaller start-ups locate near big companies,
be acquired or merged
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Factor condition
Human Resources300 out of 1000IT sectorKnowledgeStrong research universities and laboratories48 institutions eg. MIT, Princeton, Stanford, Caltech etc
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Factor condition
Capital2012: nearly $7 billionFirst half of 2014 : $ 11.6 billion of investment
Top 10 Locations for Venture Capital Investment (2012)
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Factor condition
InfrastructureEffective transportation network• 4 State roads: Highway 101, 280,680 and 880• 4 District roads: Highway 17,85,87 and 237 • 5 Bridges connecting San Francisco Bayforming a transportation hubShorten travel timelessen transportation costInternational Airport: 2 aircrafts / mins
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Demand Condition
• Sophisticated and demanding customers Internal demandSmartphone user:
60% of the US population use a smart phone
Computer user:70% of the US have broadband connections at home (Source: Nielsen 2013)
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Demand ConditionGlobal DemandConsumer electronics industryGenerated over US $1 trillion worldwide in 2014Smartphones and tablets (> 900millions)
• Strong Business to Business(B2B) relationship
e.g intel's high capacity microprocessor e.g IBM's microcomputer and PC equipment
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Related and supporting industries
• Presence of Capable, Locally-Based Suppliers• Eg. Cisco and Apple is supported
by US telecommunication giants such as AT&T and Verizon.• Reduce cost of transportation• Flexible & Efficient
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Chance
• Historical factorsGovernment-sponsored projects foster the development of IT industries• 1950s- microwave technology research for the Cold War• 1960s- spy satellites and ballistic missiles research, which give raise of many
successful semiconductor companies
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Government
• Federal support for research work• Simulative policies to boost the development of IT industries
1. In 1978, the government slashed capital gains taxes and allowed pension funds to invest in venture fund, venture capital industry thus grew 10-fold.
2. Small Business Administration (SBA) encourages venture capital investment. E.g. : For every dollar invested, the SBA would grant two
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Threats and Future Insight
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Threats
Silicon Valley's top threat is China• A red-hot Chinese Internet market is challenging the historical dominance of Silicon Valley
• China’s size and population means firms can begin challenging global businesses
Ranking of digital companies 2014 (Revenue)1. Google ($31.4 billion )2. Amazon ($10.3 billion)3. Facebook ($5.4 billion)4. Tencent – China ($5.4 billion )Others: Baidu ,Netflix, Yahoo, Microsoft, Qihoo, Sina ……
four of the top 10 fastest growing firms are located within China (Source: Strategy
Analytics)
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Threats
Silicon Valley's top threat is China
• Nearly half of worldwide tech execs expect global tech center to move to China within four years (out of 668 technology business executives at $1 billion-plus companies) Source: KPMG 2014
• Chinese is no longer want to dominate just cost-based commodity production, also want winning in innovation-based economic competition
Source: U.S.-China Economic and Security Review Commission
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Threats
How to attract and retain employees?• An increase of more than 58,000 jobs in 2014, compared with growth
of 4.1% a year agoMainly Executives and low-level employees
• Problems of low-level employeeswage growth has stagnated InflationHigh daily living expensesalaries did not rise
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Threats• Soaring rental cost• Average rental cost in Silicon Valley Region is $ 850000,average monthly rental cost is $2,300
• the proportion of rent expenses accounted for more than 35% of low-level employees’ income (Source: Joint Venture Silicon Valley2015)
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Threats
• Overburdened infrastructure• economies of scale in the 2014 continues to expand built on a stationary
infrastructure• 12 million square feet of commercial space, three-quarters do not have any
means of transport to get there
• Pollution problem• Decline in the ecosystem
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Solutions
• Solution 1: Increase competitiveness1. Set up the infrastructure to support the
developmentE.g. Building Main road to alleviate the traffic problem
2. Providing an appropriate housing policyE.g. develop new town, encourage property developer to increase the height of the building -> increase supply of housing
3. To have a more comprehensive urban and economic planning for the place
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Solutions
• Solution 2: Government cooperation E.g. Sustainable Silicon Valley (SSV) Focusing on the ecological sustainability of Silicon Valley
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Future Insight
• Continue to prosper because of her unique characteristics1. Thousand of startups conglomerate in Silicon Valley annually2. Lots of venture capital, angel funding flows in Silicon Valley3. Attract new innovative talents to Silicon Valley because of brand name4. The innovative mindset