Instrumental industry, compared with assembly-line industry, is characterized by heavy capital investment and less flexible production process, which hampers quick reconfiguration of production process for a different product. In the short teen, minimizing job-change-time and dead time may be the pr...
Instrumental industry, compared with assembly-line industry, is characterized by heavy capital investment and less flexible production process, which hampers quick reconfiguration of production process for a different product. In the short teen, minimizing job-change-time and dead time may be the prime concern. In the long term, it is imperative that the production process keeps up with the changing business climate, implementing necessary upgrades and innovations.
To that end, the accurate feasibility study of investment needs to be done first, which requires correct valuation of instrumental asset. The problem is that asset value used is usually the book value, which is quite different from its market value. The accurate valuation of asset can be obtained by estimating its economic life and depreciation pattern. Such a task is called "Valuation," and the discipline for the valuation of industrial property is called "Engineering Valuation."
Since 1970's, the accumulation of industrial capital in S. Korea is capital intensive on the one hand and labor-intensive on the other hand. Industries dominated by big business are successfully keeping up with innovations, while other businesses are lagging behind. Production equipments of those businesses lagging behind tend to be used beyond their estimated economic life. This is what is called "Pear" in Engineering Valuation. Such businesses have the potential risk of falling behind their competitors due to lack of innovations.
In this research, we would estimate the economic life of instrumental assets in businesses which could be lagging behind. We did field study on three corporations, which showed that many corporations in S. Korea have instruments which are indeed used beyond their economic life. In this study, there are also the case of so-called lemons, instruments which turned out to be mismatches for their production process and were retired. Still, despite many aging instruments, they are not serious about process innovation and fail to invest in it, losing competitiveness. This is more than a mere case of "pears."
Instrumental industry, compared with assembly-line industry, is characterized by heavy capital investment and less flexible production process, which hampers quick reconfiguration of production process for a different product. In the short teen, minimizing job-change-time and dead time may be the prime concern. In the long term, it is imperative that the production process keeps up with the changing business climate, implementing necessary upgrades and innovations.
To that end, the accurate feasibility study of investment needs to be done first, which requires correct valuation of instrumental asset. The problem is that asset value used is usually the book value, which is quite different from its market value. The accurate valuation of asset can be obtained by estimating its economic life and depreciation pattern. Such a task is called "Valuation," and the discipline for the valuation of industrial property is called "Engineering Valuation."
Since 1970's, the accumulation of industrial capital in S. Korea is capital intensive on the one hand and labor-intensive on the other hand. Industries dominated by big business are successfully keeping up with innovations, while other businesses are lagging behind. Production equipments of those businesses lagging behind tend to be used beyond their estimated economic life. This is what is called "Pear" in Engineering Valuation. Such businesses have the potential risk of falling behind their competitors due to lack of innovations.
In this research, we would estimate the economic life of instrumental assets in businesses which could be lagging behind. We did field study on three corporations, which showed that many corporations in S. Korea have instruments which are indeed used beyond their economic life. In this study, there are also the case of so-called lemons, instruments which turned out to be mismatches for their production process and were retired. Still, despite many aging instruments, they are not serious about process innovation and fail to invest in it, losing competitiveness. This is more than a mere case of "pears."
※ AI-Helper는 부적절한 답변을 할 수 있습니다.