The CASE Journal

Maipu Communication Technology Co., Ltd: challenges in innovation

Zheng He, Leida Chen,
Article information:
To cite this document:
Zheng He, Leida Chen, (2017) "Maipu Communication Technology Co., Ltd: challenges in innovation", The CASE Journal,
Vol. 13 Issue: 3, pp.414-437, https://doi.org/10.1108/TCJ-12-2015-0077
Permanent link to this document:
https://doi.org/10.1108/TCJ-12-2015-0077
Downloaded on: 19 June 2017, At: 12:54 (PT)
References: this document contains references to 0 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 36 times since 2017*
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

Users who downloaded this article also downloaded:

(2017),"Roseda’s growth decision", The CASE Journal, Vol. 13 Iss 3 pp. 438-450 <a href="https://doi.org/10.1108/
TCJ-03-2016-0021">https://doi.org/10.1108/TCJ-03-2016-0021</a>
(2017),"Cosac Naify: a small Brazilian publishing house goes abroad", The CASE Journal, Vol. 13 Iss 3 pp. 360-376 <a
href="https://doi.org/10.1108/TCJ-07-2016-0057">https://doi.org/10.1108/TCJ-07-2016-0057</a>

Access to this document was granted through an Emerald subscription provided by emerald-srm:401304 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service
information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of
more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online
products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication
Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.

*Related content and download information correct at time of download.

 Maipu Communication Technology Co.,
Ltd: challenges in innovation
Zheng He and Leida Chen
Zheng He is a Professor at the
School of Management and
Economics, University of
Electronic Science and
Technology of China,
Chengdu, China.
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)
Leida Chen is an Associate
Professor of Information
Systems at the Orfalea College
of Business, Department of
Management, HR and IS,
California Polytechnic State
University, San Luis Obispo,
California, USA.
The authors would like to thank
Mr Fei Feng for the data collection
and his valuable inputs. This study
was financially supported by the
University of Electronic Science
and Technology of China (UESTC).
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision making.
The author/s may have disguised
names; financial, and other
recognizable information to
protect confidentiality.
PAGE 414 j THE CASE JOURNAL j VOL. 13 NO. 3 2017, pp. 414-437, © Emerald Publishing Limited, ISSN 1544-9106
Our country’s economic development model driven by cost advantage and massive natural resource
consumption at the expense of environmental problems is not sustainable […] China is a major
developing nation that is aggressively transforming its economic development model and adjusting its
economic structure; therefore, executing development strategies driven by innovation successfully is
critical. […] China must improve its innovativeness in all aspects in order to gain the strategic
advantage in the new era of global competition (Chinese President Xi Jinping).
Decision dilemma
As he stepped out of the office of the CEO of Maipu Communications Technology, Mr Zhao, the
Head of Maipu’s R&D and Innovation group, was thinking about their last conversation on
December 10, 2013. What had gone wrong with the company’s innovation strategy? For as long
as the business had been operating, it had been a rising star in the industry for innovation. Since
2013, however, failures in the company’s innovation efforts had severely limited Maipu’s ability to
execute its business strategies successfully. The fact weighed heavily on Zhao, and to add to his
stress, the CEO demanded a proposal to revamp the company’s innovation approaches
in a month.
As the Head of R&D and Innovation, Mr Zhao was faced with unprecedented challenges.
The company’s past growth was consistently driven by its clear competitive strategies and strong
commitment to innovation. However, as the company grew bigger, its innovation effectiveness
decreased significantly. Maipu invested over 10 percent of revenues in R&D annually, but
innovation results in terms of quantity, quality, and velocity were far from meeting expectations.
As Mr Zhao understood, this was not a problem unique to Maipu; it was commonly found among
Chinese private high-tech companies. Mr Zhao had always been proud of Maipu’s innovative
culture and responsiveness to market trends compared to its competitors, but recently he had
grown increasingly wary about the company’s ability to innovate in this competitive industry.
Mr Zhao had been searching for the answers to these questions: which approach should the
company take to drive future innovation in order to achieve its strategic objectives? How could
Maipu better align its innovation efforts with its current strategies? How could Maipu maintain
sustainable and organic growth in the future that would lead to a bigger and stronger company?
History of Maipu Communications Technology Co., Ltd
Founded in 1993 in China’s western city of Chengdu, Maipu is a private high-tech corporation
built on the philosophy of organic growth through developing intellectual properties and
innovations. The company’s mission was to make network services more intelligent by providing
customized, easy-to-use and secure network infrastructure equipment and industry-specific
applications and services; the company aspired to become the leading provider of intelligent
network solutions for corporations in China. With over 20 years’ experience of serving corporate
customers, Maipu offered a comprehensive range of integrated and intelligent network
equipment and services to clients at both local and national levels. Its products and solutions had
been widely adopted by financial services companies, governments, internet service providers,
DOI 10.1108/TCJ-12-2015-0077
 military, and utility companies. Maipu’s products had a dominating market share in the financial
industry in China and were sold in over 40 countries worldwide.
Throughout the company’s past growth, R&D and innovation played a pivotal role. Over 300 of
Maipu’s 1,200 employees worked in R&D, and the company’s R&D investments accounted for
over 10 percent of its annual sales. As the result of the company’s focus on technological
innovation, Maipu owned the intellectual property for all the key technologies deployed in its
products. In addition, it held over 400 patents, and dozens of its innovation projects had been
recognized by the Ministry of Information and Telecommunications and by agencies at the
provincial level.
Between 1993 and 2013, Maipu went through the start-up, growth, and maturity periods in terms
of its products, corporate strategies, and innovation models. The company started with three
people, RMB5,000 (approximately US$850) and one innovative product, the multi-port repeater.
The product was developed by one of the founders and designed to reduce network access
costs significantly for banks to connect their terminals to computer networks. Through its
“try before you buy” sales strategy, Maipu quickly developed a loyal customer base in the banking
industry. Doubling as the after-sales support technician, the inventor of the product was able to
gain first-hand customer feedback and improved the product in a timely manner. With the
success of its first product, Maipu quickly grew to a company with annual sales of over RMB50
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

million in 1995.
Nevertheless, Maipu’s success was challenged by a growing number of new entrants and
copycats in the marketplace. To maintain its growth trajectory, Maipu had no choice but continue
to be entrepreneurial and innovative. In 1998, the company decided to enter the Digital Data
Network (DDN) equipment market. The target customers of the DDN equipment products were
major telecommunications service providers. Once again, Maipu’s innovative technology
provided the company with an important competitive advantage; the bandwidth and coverage of
its products exceeded those of any competing products on the market at the time. As the result,
Maipu experienced a period of rapid market share and revenue growth between 1998 and 2002.
During this period, Maipu implemented the “continuous improvement” strategy in its product
development in order to launch its products quickly and beat competitors to the market. Under
this strategy, new products were tested and improved at the clients’ sites instead of the lab.
The R&D team was intimately involved in the sale and after-sale support of products in order to
identify product issues and address customer requirements quickly. This approach shortened
temporal product development and time-to-market requirements significantly.
Realizing the critical role innovation played in the telecommunications equipment industry, Maipu
established its R&D and Innovation group during this period. The group demonstrated great
entrepreneurial spirit and market orientation. It worked closely with the sales division and
customers to determine product requirements from the market. While its size was relatively small
at the time, the R&D and Innovation group consisted of small, specialized teams whose members
were highly motivated and competent in various aspects of the product innovation life-cycle.
During the growth period, a series of Maipu’s sustaining innovation initiatives led to competitive
prices and enhanced usability of its products, and its disruptive innovation in equipment design
reduced the cost of DDN switches by 70 percent, reinvigorating the adoption and extending the
longevity of this technology in the marketplace. As the result of its successful innovation efforts,
Maipu dominated the DDN switch market with an over 80 percent market share in China. At the
same time, Maipu’s R&D and Innovation group led the company’s transition from the aging DDN
market to IP network products.
Between 2003 and 2012, Maipu’s IP network technologies and product lines matured and
stabilized. The company defined its competitive strategy as focused differentiation with an
emphasis on meeting the needs of clients in the financial services, network services, and
government sectors. To support its strategy and target markets, the company developed a family
of router products that were designed to reduce the complexity of network implementation and
total cost of ownership for clients, while at the same time, enhance network security and
compatibility. To become a comprehensive network solution provider, Maipu added network
switches, network security products, VoIP, and network management software to its product

VOL. 13 NO. 3 2017 j THE CASE JOURNAL j PAGE 415

 offerings between 2002 and 2003. In 2007, Maipu launched a line of high-end network switches
that were deemed the most efficient switches in the domestic market. During the subsequent
years, the company’s network switch business exceeded its router business in terms of sales
volume and revenue. As a result, the company experienced steady growth in both sales and
profits during this growth period.
Expanded product lines and complex technologies required Maipu to grow its R&D and
Innovation group significantly. The old model of small independent R&D teams could no longer
effectively support the highly complex innovation projects that required a great deal of human
capital and diverse expertise. Maipu reformed its innovation model by adopting the Integrated
Product Development (IPD) management approach popularized by IBM. The IPD approach is
more appropriate for managing large innovation teams and is characterized by cross-functional
teams, structured processes and sub-processes, IPD tools, and continuous assessment. To
support the IPD model, Maipu went through a major internal reorganization and redesigned its
product development workflow (see Figure 1). It established the Investment Prioritization
Committee, formed a cross-functional Product Development Team, and created the specialized
process management team to continuously improve and optimize innovation processes. The
group’s productivity and professionalism during product development was further enhanced
through functional specialization as illustrated in the organizational chart of Maipu’s R&D and
Innovation group (see Figure 2). The IPD innovation model proved to be effective as evidenced by
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

impressive innovation outcomes during this period. Maipu was able to produce at least one killer
innovation per year, and the majority of the company’s patents and innovation awards were
achieved during this period.

The age of transformation

The period after 2013 could be termed the age of transformation for Maipu due to changes in the
external environment. While the network equipment market continued to grow in China (see
Figure 3), maintaining a competitive position in this market became more and more challenging
for Maipu. As internet technologies matured over the previous 20 plus years, achieving innovation
of network equipment products had become more and more difficult. Differences among
products from various vendors had become negligible. The inevitable result was a series of
severe price wars. Industry giant Huawei’s entry into the corporate network domain in China
further intensified the competition in this industry. Maipu’s competitors in the domestic market

Figure 1 Maipu’s integrated product development process

Investment Prioritization Committee

Market
Intelligence

Client
Feedback
Management

performance
Operational
Understand

Strategies

Evaluation
Develop

Optimize
Segment

Markets
Analyze

Market
Markets

Markets

Competitive
Plan

and

Intelligence

Technology
Trends

Product Mix
Conceptualize

Develop

Produce

Support
Validate

New
Plan

Product
Candidates

Product Development Team

PAGE 416 j THE CASE JOURNAL j VOL. 13 NO. 3 2017

 Figure 2 Organizational structure of Maipu’s R&D and Innovation group

R&D and Innovation Group

Planning Business Management

Engineering Support Process Management and Optimization

Innovation Management Human Resources and Administration

Project Software Hardware Material

Testing
Management Development Development Management

Figure 3 Network equipment market size in China (2009-2013)

Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

6,000

5,000 4,786.7
4,578.3
4,165
4,000 3,721.7 3,781.7
3,388.3 3,525
3,181.7
3,000 2,826.7
2,546.6

2,000

1,000

0
2009 2010 2011 2012 2013
Overall Network Equipment Market Size (in million dollars)
Corporate Network Equipment Market Size (in million dollars)

included Cisco, H3C, Huawei, Zhongxing Communications, Star Networks, Fenghuo

Telecommunications, and Juniper Networks, all of which commanded a significant share of
the market in various sectors as illustrated in Figure 4. Maipu’s market position as the leader of
second-tier vendors also put the company at a disadvantageous position in a mature market, and
this situation caused the firm to lose market share on multiple fronts. Furthermore, the growth of
the network infrastructure markets had become very slow compared to the growth of the market
for cloud computing, Big Data, mobile internet, and Internet of Things (IoT). As organizations
shifted their resources toward these new technologies, Maipu would be competing against other
industry giants for a slice of this ever-shrinking pie unless the firm could innovate effectively.
Under intense competitive pressure from the market, Maipu had been consistently lowering the
prices of its products leading to reduced overall profit margins. Maipu had also been aggressively
controlling its costs and improving operational efficiency. Nevertheless, these efforts have not
been enough to return Maipu’s revenue and profit growth to the good old days. At this critical
juncture, Maipu decided that it must transform itself by overhauling its product mix drastically
through R&D and innovation. Inspired by new opportunities brought by cloud computing, Big
Data, wireless internet, and IoT technologies – all of which received growing industry attention in
the recent years – the executive management team defined the new vision to be “expanding both

VOL. 13 NO. 3 2017 j THE CASE JOURNAL j PAGE 417

 Figure 4 2013 market share of various firms in the network equipment market in China

3.35% 10.60%
Cisco

H3C
5.87% 31.32%
Hwawei

7.23% Maipu

Star Networks

Zhongxing
13.06%
Other

28.57%
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

the corporate network and industry application solution lines of business and becoming the
leading brand in intelligent network services in China.” Maipu planned to achieve this vision by
providing intelligent, high capacity, secure and energy-efficient network solutions to clients,
increasing its investments in mobile internet applications and developing mobile internet services.
Its corporate network product offerings now included routers, switches, network security
equipment and WLAN equipment, and its industry-specific application and service product
offerings consisted of unified communication, mobile network management systems, mobile
internet services, and multimedia information dissemination systems. The management team
designed the following business strategies:
1. Maintain and enhance market share and technology advantage in the area of corporate
network equipment as well as complete and enrich its four basic network product lines (i.e.
routers, switches, network security products, and WLAN equipment) to provide
comprehensive and superior network solutions.
2. Continue to strengthen the company’s strong hold in the financial industry market by intensifying
our business development efforts targeting at banks, credit unions, and brokerage firms.
3. Enhance our collaboration efforts with network service providers and diffuse our products to
new markets through the channels of network service providers.
4. Develop competitive network solutions for growing industry sectors, such as the healthcare
and education sectors at the municipal level to develop broader market coverage.
5. Explore market opportunities in the military and utility sectors by taking advantage of the
Chinese government’s growing concerns and emphasis on network security.
6. Increase investments in developing industry-specific applications and services to meet the
needs of clients. Increase the contribution of industry-specific applications and services to
the company’s overall revenue.
To better support the new business objectives and strategies, Maipu augmented its organizational
structure accordingly. Figure 5 displays the current organizational structure at Maipu.

Innovation model at Maipu during the age of transformation

During the age of transformation, Maipu’s innovation model could be defined as “market-driven
platform + distributed innovation.” Market-driven platform refers to Maipu’s existing infrastructure of a
large customer base, strong technical know-how, established brand name, superior management
team, and the firm’s ability to provide high quality pre- and after-sales services to customers.

PAGE 418 j THE CASE JOURNAL j VOL. 13 NO. 3 2017

 Figure 5 Current organizational structure of Maipu

Shareholder Committee
Strategy Committee
Oversight Committee
Evaluation Committee
Board of Directors Secretary of the Board
Appointment Committee

Audit Committee CEO

VP of Operations CFO
Business Operations

R&D and Innovation

Sales and Services

Strategic Marketing

Human Resources

Investor Relations
Office of the CEO

Quality Control
Internal Audit

Finance
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

Distributed innovation refers to attracting external talent to create start-up innovation subsidiaries
funded through professional angel investors. These innovation subsidiaries have the advantage of
operating with greater freedom, flexibility, agility, and efficiency, than their parent organization in the
hope of developing more disruptive innovations. Operated as start-ups, the subsidiaries are expected
to focus on technology and product innovation and provide Maipu with new products and solutions
that would prove to be competitive in the marketplace, and at the same time, the subsidiaries
leveraged the parent company’s resources, brand name, services, access to customers, and
economy of scale. The current innovation model can be best described by the organizational structure
of Maipu’s R&D and Innovation group displayed in Figure 6 and Maipu’s product development
process displayed in Figure 7. A total of six innovation subsidiaries were established covering several
technologies including wireless internet, cloud computing, information security, and multimedia
communication. To support innovation, Maipu’s cross-functional product management and
development team provided the subsidiaries with support to reduce time-to-market of new products.

Figure 6 Organization structure of R&D and Innovation group of Maipu

R&D and Innovation Group

R&D Start-Up Subsidiaries Quality Assurance Engineering

Router Products XindianTechnologies Quality Mgmt.

Wideband Products New Micro Tech. Quality Assessment

Application Software New Cloud Software

Xindong
Software Platform
Technologies

Hardware Platform Beijing Maipu Huaxin

info. Technologies
R&D Support
Chendu Maipu Info.
Technologies

VOL. 13 NO. 3 2017 j THE CASE JOURNAL j PAGE 419

 Figure 7 Product development process at Maipu

Opportunity Proof of New New

Discovery Business Planning Concept (POC) R&D and Marketing Planning Product Product
Release Sales

Develop
new
product
idea by the

Develop R&D plan

subsidiary Market new

Perform market and technical

requirements
product

Form analysis team by the

Form R&D team by the

Develop the new project
Perform feasibility study
Form core project team

Analyze

Develop

Release new product

Select

Quality assurance
Test
business plan
subsidiary

Launch project
Perform after

subsidiary
subsidiary
to develop sales services

analysis
new
product
idea Improve product
Develop new project
marketing plan
Identify
Manage sales
market
channels
needs by
Maipu’s
Marketing Develop new Produce
Test-Produce
project new
Initiate new product
production plan product
new
project by
Maipu’s
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

R&D

The company has achieved some early success through its current innovation model. Two of the
six subsidiaries have achieved profitability in less than two years. Nevertheless, in terms of using
innovation to support its strategic objectives, Maipu still faced the following challenges in its
innovation endeavor:
■ Although six innovation subsidiaries were created within two years, so far, the innovation
model has only led to a very limited number of innovative products. After two years, only one
new product, a software system designed to address security and disaster recovery issues of
3G network equipment, had achieved widespread adoption by the market and financial
success. All the other innovation initiatives were plagued by various technical and market-
related problems which led to disappointing results.
■ From 1993 to 2013, Maipu has developed an effective system to balance and control quality,
schedule, and budget associated with innovation initiatives. Nevertheless, the distributed
innovation approach has undone Maipu’s effort overnight and led to poor quality products as
well as severe budget and schedule overruns. In their pursuit of development efficiency, the
subsidiaries failed to enforce rigorous testing processes and quality standards. As a result, the
quality of the products developed by the subsidiaries was consistently subpar compared
Maipu’s own products. These failures affected the overall brand image of Maipu in the
marketplace. Furthermore, the subsidiaries often did not practice effective schedule
management leading to repeated delays of product release. As a side effect of poor
development schedule management, several subsidiaries were struggling financially.
Mr Cui, the Director of Marketing at Maipu, commented, “Maipu must enforce stricter rules for the
innovation subsidiaries. We all understand that innovation initiatives come with the risk of failure,
but the current innovation outcomes are not commensurate with the amount of investments we
are making. The subsidiaries rely on Maipu’s brand image to market their products and Maipu’s
infrastructure to provide after-sale services. We are now getting too many client complaints
regarding the quality and delivery delays of their products. This is wasting a lot of the parent
company’s time and resources”:
■ Misalignment between innovations and market needs existed. Canceled and failed R&D
projects due to market misalignment caused significant financial losses to both Maipu and its
innovation subsidiaries. The majority of the canceled and failed projects fell into the following
two categories: the new product could not be successfully sold through Maipu’s existing sales
channels; and the size of the target market for the new product was too limited for the
innovation to make meaningful contribution to Maipu’s revenue and profit objectives.

PAGE 420 j THE CASE JOURNAL j VOL. 13 NO. 3 2017

 Additional issues with the current innovation model emerged in Mr Zhao’s discussions with the
leaders of the subsidiaries:
■ Mr Li, the General Manager of one of Maipu’s subsidiaries, Xindian Technologies, complained,
“Maipu is micromanaging everything that we do. Its need to control budget has created many
bureaucratic hoops that we have to jump through to get anything approved. This process has
affected our speed to act and has wasted a great deal of our energy and resources.”
■ Mr Zhang, the General Manager of New Micro Technologies, another of Maipu’s subsidiaries,
complained, “The performance evaluation approach used by Maipu is not suitable to firms like
ours. In the high-tech industry, it is almost impossible to estimate the market outlook,
development cycle and costs of new product development. Quantitative metrics are
meaningless to firms like ours.”
■ Mr Liao, the General Manager of New Cloud Software, commented, “The idea of resource
sharing is a great one, but it falls apart during execution. Some technical experts are being
pulled into multiple projects simultaneously, and they ended up not being able to focus on or
complete any project successfully.”
■ Mr Ren, the General Manager of Xindong Technologies, commented, “Maipu’s intolerance of
innovation project failure is causing low morale among our employees. Everyone is getting
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

more and more conservative and is only willing to participate in low risk projects now.”

Conclusion
At this important juncture in Maipu’s history, Mr Zhao felt baffled by the dilemma with which he
and his organization were faced. History had shown that as a company grew larger, its innovation
agility and efficiency diminished. Whether Maipu could escape this curse would be essential to
the future of the company. Mr Zhao asked himself the following questions: what were the root
causes of Maipu’s disappointing innovation results in the recent years? Which entity was to
blame, Maipu or its innovation subsidiaries? Which innovation management approach was
suitable to Maipu in the current environment? The pressure felt notably heavier for Mr Zhao when
he was tasked with proposing a plan of action to enhance Maipu’s innovativeness to the CEO
and Board of Directors to be presented in a month.

VOL. 13 NO. 3 2017 j THE CASE JOURNAL j PAGE 421

 Exhibit 1

Table AI Financial statements

Statement of financial position (in Chinese Yuan: RMB)
2013
Current assets Current liabilities
Money funds 234,807,557 Short-term loans 56,200,000
Notes receivables 135,079,970 Notes payables 82,791,633
Accounts receivables 80,191,332 Accounts payables 76,462,479
Payments 4,810,258 Advance payments 22,595,301
Other receivables 3,554,744 Staff salaries 37,060,182
Inventory 126,569,775 Tax payables 12,571,496
Other current assets 6,755,195 Dividend payables 16,965,000
Total current assets 591,768,833 Other payables 5,832,783
Other current liabilities 8,878,095
Total current liabilities 319,356,970
Illiquid assets Long-term liabilities
Financial assets available for sale 1,000,000 Long-term payables 5,500,000
Long-term receivables 5,818,099 Estimated liabilities 6,985,260
Long-term investments in stocks 1,089,181 Other 15,789,790
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

Fixed assets 86,887,829 Total long-term liabilities 28,275,050

Intangible assets 29,091,793 Total liabilities 347,632,020
Deferred tax assets 16,813,097
Total illiquid assets 140,700,000
Total assets 732,468,834
Shareholder equity
Paid-in capital 135,500,000
Capital reserves 148,792,164
Surplus reserves 22,506,184
Undistributed profits 72,788,010
Minority shareholder equity 5,250,456
Total shareholder equity 384,836,814
Total liabilities and shareholder equity 732,468,834
Income statement (in Chinese Yuan: RMB)
2013 2012 2011
Revenue 581,029,122 612,541,311 539,981,505
Cost of goods sold 263,526,725 285,185,502 272,173,034
Selling expenses 187,564,924 184,455,019 161,993,089
General and administrative expenses 104,862,400 102,085,152 80,900,962
Financial expenses 1,433,105 4,657,602 4,416,033
Asset depreciation 14,483,504 6,042,275 5,596,598
Investment income −302,907 −740,773 0
Operating profit 8,855,555 29,374,986 14,901,786
Gains from disposal of fixed assets 50,024,755 42,007,181 34,757,498
Profit before tax 58,880,310 71,382,167 49,659,285
Income tax expenses 6,419,438 5,642,518 4,430,490
Profit for the year 52,460,872 65,739,649 45,228,795

PAGE 422 j THE CASE JOURNAL j VOL. 13 NO. 3 2017

 Exhibit 2

Table AII Glossary of technical terms

Term Definition

3G The third generation of cellular technology standard that uses high-speed broadband to allow portable electronic
devices to access the Internet wirelessly
Cloud computing A model for using a network of remote computer resources rather than local servers or personal devices to store,
manage, and process data
Digital Data Network (DDN) A network that transmits discrete, discontinuous representation of information, traditionally ones and zeros
Internet of Things (IoT) A network of objects that have network connectivity, allowing them to transfer data over the internet without requiring
human involvement
Internet protocol The method by which data is sent from one computer to another computer on the internet
IP network A communication network that uses Internet Protocol (IP) to send and receive messages between one or more
computers. Each computer on the network is assigned an IP address that uniquely identifies that computer
Mobile internet The use of a mobile or wireless network to access the internet using handheld or mobile devices such as a
smartphone or tablet PC
Repeater A network device that regenerates an incoming digital signal and retransmits it to increase the transmission range of
the original signal
Router A network device that forwards data packets from one network to another
Downloaded by Australian Catholic University At 12:54 19 June 2017 (PT)

Switch A network device that filters and forwards data packets between network segments
Unified communications The seamless integration of both real-time communication services (such as instant messaging and video
conferencing) and non-real-time communication services (such as voicemail and e-mail)
Voice over IP (VoIP) A telephony technology that manages the delivery of voice information in digital form over the internet
Wireless Local Area Network A communications network that links two or more devices wirelessly using high-frequency radio waves within a limited
(WLAN) geographic area

Corresponding author
Leida Chen can be contacted at: lchen24@calpoly.edu

VOL. 13 NO. 3 2017 j THE CASE JOURNAL j PAGE 423