Efficiency of Taiwanese Laptop Manufacturers

Taiwanese laptop manufacturers strive hard to maintain their high growth rates and positions as leaders in the industry. Michael E. Porter claimed that Taiwanese enterprises must increase industrial efficiency to secure competitive advantage. Hence, developing an effective means of measuring and comparing the efficiency of Taiwanese laptop manufacturers is essential. Increasing the production efficiency of inefficient companies will improve the average efficiency and global competitiveness of the Taiwanese laptop industry. This investigation examines the efficiency of 12 Taiwanese laptop manufacturers in 2002. Although financial ratio analysis represents a conventional approach to measuring the performance of enterprises using financial reports, this method is a crude tool for measuring the technical efficiency of manufacturers. This study demonstrates the feasibility of adopting Data Envelopment Analysis (DEA) to identify individual manufacturing firms that are technically less efficient than other ones. Technical efficiency is measured in terms of output variables relative to input variables. In this study, a DEA model consisting of three inputs and three outputs is applied. The input variables are Operating Expenses, Non-Operating Expenses and Operating Costs, and the output variables are Operating Revenue, Non-Operating Revenue and Assets. The results of this investigation reveal that, out of 12 laptop manufacturers, four firms were found to be relatively more technically efficient than the other eight. Considering the fact that Taiwanese laptop industry had increased its global market share from 31.5% to 63.5% from 1997 to 2003, it can be said that the efficiency of most of Taiwanese laptop manufacturers is above the average level of industrial performance in 2002. DEA is implemented herein to elucidate the relationships between input variables and output variables. Conclusions and recommendations are also provided. Performance measurement is critical for an enterprise, especially for a Taiwanese laptop manufacturer in a very competitive market. The results of this investigation contribute markedly to effort to determine the efficiency of Taiwan\u27s laptop industry