Research On R & D Investment Decision Making Of Cemented Carbide Industry Based On Value Chain

Cemented carbide corporations of China are facing a dual critical situation in which foreign products hold high-end market space and domestic competitors nibble away low-end market. Limited investment in R&D did not pay due dividends. Thus, effective value management over cemented carbide corporations'R&D activities is imminent. Value chain is an effective tool of value management, which plays an important role in upgrading enterprise value and enhancing enterprise competitiveness. The integration of value chain and R&D management provides an innovative idea and method for enterprise R&D activities.Aiming at the R&D decision making of cemented carbide corporations, this paper initially analyzes cemented carbide corporations' internal, vertical and horizontal value chain, based on which it explores the relationship between cemented carbide enterprise value chain management and enterprise value increase, and puts forward cemented carbide enterprise R&D model in the viewing angle of value chain. Then it investigates the R&D decision making based on internal, vertical and horizontal value chain of cemented carbide corporations, analyzes how to choose cemented carbide enterprise R&D direction and R&D organization under different value chain circumstances, builds real option model and Bayes model based on horizontal value chain, option game model based on vertical and horizontal value chain and other related R&D decision making models. Moreover it also carries out instance analysis and digital simulation.Firstly, different industries have different value chain characteristics. The research in the paper sorts out the value chain relationship of cemented carbide industry and finds that cemented carbide industry is strongly characterized of value chain. These findings are significant to the enterprise production and R&D decision-making. Taking value chain into the consideration of cemented carbide enterprise R&D and abiding by the cycle process of value chain analysis-R&D-value chain optimization, will be helpful for the corporations to make full use of value chain, enhance the scientific of R&D decision making, develop and raise core-competence, and upgrade enterprise value ultimately.Secondly, by internal value chain, building corresponding real option, compound option and Bayes decision making model based on the characteristics of R&D market uncertainty, staging R&D and technical uncertainty, helps cemented carbide corporations to choose correct projects and upgrade their R&D investment decision making ability.Thirdly, by vertical value chain, when R&D investment decision making of cemented carbide industry is made, not only factors such as material supply of upstream enterprises and technology transfer should be taken into consideration, but also the influence of product type and technical requirements of downstream enterprises.Adopting the method of vertical R&D cooperation helps to develop enterprise value. Because corporation's competition in vertical value distribution, investment model of cemented carbide industry's vertical R&D cooperation may not be achieved. The paper puts forward the preconditions of R&D cooperation of vertical corporations.Fourthly, by horizontal value chain, R&D cooperation among corporations can reduce R&D risk effectively, but the pursuit of value contributes to R&D competition among corporations. R&D competition and cooperation are key issues that should be considered in R&D investment decision-making. The research of this paper shows that when the uncertainty encountered by R&D project is significant, the adoption of R&D cooperation can add higher enterprise value than R&D competition.