麦肯锡标杆企业研究

SEC China010821BJ-Toshiba CONFIDENTIAL Brown Goods and PC Competitor Analysis: Toshiba SAMSUNG ELECTRONICS CHINA (SEC China) August 20, 2001 This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion. SEC China010821BJ-Toshiba 1 OVERVIEW OF COMPETITOR ANALYSIS FRAMEWORK 1. Background information Location Registered capital Management team Equity structure Starting year Number of employees Era analysis 4. Value chain strategy 5. Organization and ownership 6. Financial performance Focus on Marketing, advertising and promotion Distribution (channel and sales force) Organization structure Ownership structure Sales Profit 2. Strategy 3. Product/market Mission Vision Corporate strategy Key product offerings Market position SEC China010821BJ-Toshiba 2 BACKGROUND INFORMATION 1. Background information Location Registered capital Management team Equity structure Starting year Number of employees Era analysis 4. Value chain strategy 5. Organization and ownership 6. Financial performance Focus on Marketing, advertising and promotion Distribution (channel and sales force) Organization structure Ownership structure Sales Profit 2. Strategy 3. Product/market Mission Vision Corporate strategy Key product offerings Market position SEC China010821BJ-Toshiba 3 Source: Toshiba website, Lit search BACKGROUND INFORMATION TOSHIBA Established: 1875 by Hisashige Tanaka President & CEO: Tadashi Okamura Total Assets: US$51,578 million Shareholders Equity: US$10,054 million Number of employees: 190,000 worldwide (As of September 30, 2000) Domestic Plants, Branches Offices And Other Facilities: Production facilities: 25 Branch offices: 35 Sales offices: 23 Overseas Plants, Branches Offices and Other Facilities: Offices: 10 Manufacturing companies: 42 Subsidiaries & affiliates: 72 SEC China010821BJ-Toshiba 4 Source: Company website, Lit search BACKGROUND INFORMATION DALIAN TOSHIBA TELEVISION, LTD Location: Dalian, Liaoning Province Starting year: 1996 Registered Capital: US$30 million Unit Sold: color TV 1 million sets, 50% export (Year 2000) Joint Venture Partners Type Foreign Juristic Persons Shares Foreign Juristic Persons Shares Toshiba Toshiba (China) Co. Dalian Daxian (Group) Co., Ltd. Number of employees: 2,000 Products: 21 34 color TV (CRT, Projection, Flat) Domestic Juristic Persons Shares SEC China010821BJ-Toshiba 5 Source: Company Report, Lit search TOSHIBAS CORPORATE MANAGEMENT TEAM President & CEO Tadashi Okamura Corporate project Corporate staff Corporate support services iValue Creation Company CEO: Tsutomu Kawada e-Solutions Company CEO: Hiroo Okuhara Social Infrastructure Systems Company CEO: Tsuyoshi Kimura Digital Media Network Company CEO: Atsutoshi Nishida Mobile Communications Company CEO: Tetsuya Mizoguchi Power Systems & Services Company CEO: Toshiyuki Oshima Semiconductor Company CEO: Takeshi Nakagawa Display Devices & Components Company CEO: Eisaburo Hamano Medical Systems Company CEO: Masamichi Katsurada Home Appliances Company CEO: Makoto Nakagawa SEC China010821BJ-Toshiba 6 Source: Company website, Literature Search HISTORY OF TOSHIBA SEC China010821BJ-Toshiba 7 Source: Literature Search; McKinsey Analysis TOSHIBAS DEVELOPMENT WENT THROUGH THREE STAGES Organization structure Corporate strategy Product Development & Technology 1875-1939 Two Japanese electrical equipment manufacturers merged in 1939 to create Toshiba. Technological innovation accounted for the companies successes. One of the founders was the so-called Edison of Japan. Main products included transformers, electric motors, light bulbs, radio receivers, and cathode-ray tubes. 1978- PRESENT 1939-1978 The company grew rapidly and became a market leader in the electrical and electronic industry. However, the organization became more bureaucratic. The company continued to be innovative in the early years, producing many firsts in the industry. However, It lost its innovator image in the 70s . Numerous leading products in the electrical and electronics areas. Examples includes Japans first vacuum cleaner, first fluorescent lamp, first radar, etc. Toshiba shifted direction by investing heavily in IT segment. The organization became increasingly global, employing 190,000 employees world-wide with annual sales over 5 trillion. IT focus, diversification, innovation and globalization are four key elements of Toshibas corporate strategy. Toshiba is intensively focusing on IT-related business (i.e. telecom and internet), meanwhile, leveraging its legacy businesses to generate stable income Business Building Becoming Industry Leader Meeting worldwide competition SEC China010821BJ-Toshiba 8 Source:Literature Search; McKinsey Analysis DEVELOPMENT OF DALIAN TOSHIBAS TV BUSINESS IN CHINA Key initiative Key results 1996-1997 Founded as a joint venture in 1996, construction was completed in 1997. Conducted accurate market forecast and implemented just in order inventory management. Inventory turn-over less than two days. Made profit the next year. 2001 1998-2000 Focused on high profit margin PJTV segment, and competed on technology, service and management rather than price. Strengthened customer service Revenue and profit grew 50% annually. Became the No. 1 market share leader in PJTV segment. Toshiba decided to relocate its digital TV production to Dalian and invested 300 million to expand capacity from one million units to 1.5 million units exported 800,000 units to Japan. Business Building Establishing Leadership in PJTV Market Becoming Toshibas Key Global TV Production Base SEC China010821BJ-Toshiba 9 TOSHIBA WILL FURTHER INVEST IN IT INDUSTRY IN CHINA Background information Source: Literature research, interview To support Chinas 10th 5-year plan, we will enlarge our investment in IT industry. Toshiba has the world -leading LCD related and semiconductor technology. The amount of each investment will exceed I billion USD. “Apart from Japan, Toshiba divides global market into four regions, America, Europe, China and the rest of Asia. China is the only region made up of one single country Chief representative of Toshiba in China Invested companies in China Total investment Chief representative Total number of employees Importance of China Future investment plan 23 RMB 6 billion Pintianxinzheng (pinyin) over 10,000 Chief representative of Toshiba in China Source: literature research, interview SEC China010821BJ-Toshiba 10 TOSHIBA IS THE LEADING PLAYER IN NOTEBOOK MARKET BOTH IN CHINA AND GLOBALLY Time Key milestones 1985 1990 1993 1994 1999 2000 Introduced the first notebook in the world Introduced STN notebook Introduced color TFT notebook Introduced Pentium-empowered notebook Ranked number one in China notebook market for 4 years Ranked number one in world wide notebook market for 7 years Era analysis of Toshiba in Notebook Source: literature research, interview SEC China010821BJ-Toshiba 11 STRATEGY 1. Background information Location Registered capital Management team Equity structure Starting year Number of employees Era analysis 4. Value chain strategy 5. Organization and ownership 6. Financial performance Focus on Marketing, advertising and promotion Distribution (channel and sales force) Organization structure Ownership structure Sales Profit 2. Strategy 3. Product /market Mission Vision Corporate strategy Market position Key product offerings SEC China010821BJ-Toshiba 12 TOSHIBAS MISSION AND VISION Corporate mission “We, the Toshiba Group companies, based on our total commitment to people and to the future, are determined to help create a higher quality of life for all people, and to do our part to help ensure that progress continues within the world community Corporate vision “To grow with excellence as the leading-edge, internet-ready enterprise globally by accelerating innovation with agility, and to create a 21st century of success hand in hand with our customers Source: Company website, Lit search. SEC China010821BJ-Toshiba 13 THREE STRATEGIES PROPEL TOSHIBA TO BECOME A GLOBAL HI-TECH LEADER IN THE NEW MELLIMUM Toshiba as a leading-edge, internet-ready global leader in hi-tech Accelerate the speed of innovation Management Innovation (MI2001) is a major initiative being promoted throughout Toshiba Group. It is aimed at advancing creative destruction and competitive superiority Champion market-centric management Customer Relationship Management and Supply Chain Management systems will be deployed to cover company-wide operations. Be internet-ready Digital Manufacturing, a new system, will be introduced throughout the Toshiba Group An IT infrastructure for collaborative engineering will be established Source: Lit search, external interviews: Toshiba Annual Report SEC China010821BJ-Toshiba 14 ASSESSMENT OF TOSHIBAS CURRENT STRATEGIC POSITION SWOT Strengths Broad and diversified product portfolio Strong presence in Asia Strong R&D and manufacturing capabilities Weaknesses Less customer focused Weak brand name in cutting-edge information technologies Unbalanced global presence Opportunities Global digital convergence Emerging technologies, i.e., Internet, 3G China joining WTO opens doors to foreign companies Threats Bureaucratic management style Its core semiconductor business is a cyclical commodity business Behind the curve in key IT developments SEC China010821BJ-Toshiba 15 THERE ARE TWO SUCCESSFUL MODELS IN THE CHINA CTV MARKET, DALIAN TOSHIBA FOLLOWS THE SONY MODEL The Konka Model Capital intensive, aggressive growth through economies of scale in manufacturing and in the sales force From 1993 to 1998 Konka acquired TV manufacturers: North east Du Dan Jian, San Xi, An Suo, Chong Qing factories to bulk up Grew capacity by 2 million units from 1993 to 1998 Through economics of scale and aggressive pricing Konka was able to grow market share from 3% to 11% from 1995 to 2000 The Sony Model Zero in on the high end, high profit segment of CRT TV market with a strong brand able to command price premiums Not in a strong presence in unit market share, but the top brand when consumers respond for the brand quality and reliability Corporate philosophy unwilling to sacrifice profits for larger market share (vast different from Chinese players) Future target focused on higher end, cutting edge technology TVs e.g. PJTV, Digital TV, LCD and PDP which have significantly higher profit margins. Source: Lit search, McKinsey analysis SEC China010821BJ-Toshiba 16 TOSHIBA SHIFTS ITS STRATEGIC FOCUS TO APPLICATION SOLUTION AND CUSTOMER SERVICE IN CHINA NOTEBOOK MARKET Mission To be the most responsible IT product application solution and service provider Time Strategic focus 1996 1997 1998 1999 Product itself Channel development Application Customer service 2000 VIP certification focusing on core customers Channel development into 2nd tier geographies Application solution of mobile office concept Toshiba notebook strategy* in China Strategy evolvement * Toshiba notebook strategy in China is co-developed by Digital China, Toshibas exclusive notebook chief-distributor in China Source: literature research, interview SEC China010821BJ-Toshiba 17 PRODUCT/MARKET 1. Background information Location Registered capital Management team Equity structure Starting year Number of employees Era analysis 4. Value chain strategy 5. Organization and ownership 6. Financial performance Focus on Marketing, advertising and promotion Distribution (channel and sales force) Organization structure Ownership structure Sales Profit 2. Strategy 3. Product /market Mission Vision Corporate strategy Key product offerings Market position SEC China010821BJ-Toshiba 18 TOSHIBAS GLOBAL NET SALES BY BUSINESS SEGMENT Source: Toshiba web site, Lit Search Yea 2000 ( billion) 7%10%23%9%23%28%Information & Communications & Industrial Systems 1,858 Power Systems 571 Electronic Devices & Components 1,477 Digital Media 1,518 Home Appliances 660 Others 473 SEC China010821BJ-Toshiba 19 DALIAN TOSHIBAs KEY TV PRODUCT OFFERINGS Color TVs (inch, model no.) Projection TV Series: 43 61 61D9UXC 50D9UXC 43D9UXC 50D8UXC 43D8UXC Source: Company website, Lit search CRT TV Series: 21 29 29D2DC 29D2XC 25D2XC 25E3DC3 21D2NC Flat TV Series: 21 34 34D8UXC 34D6DC 29D8UXC 29D6DC 29D3XC 25D6XC 21AF6C SEC China010821BJ-Toshiba 20 DALIAN TOSHIBAS MARKET POSITION IN CHINAS CONVENTIONAL CRT TV MARKET: NO. 5 MARKET SHARE LEADER Market share by sales, % Source: GFK, McKinsey Analysis, External interviews: Konka, Sony, Toshiba 9 . 7 1 1 . 79 . 69 . 37 . 4 7 . 57 . 07 . 37 . 0 5 . 76 . 65 . 04 . 24 . 94 . 23 . 94 . 04 . 63 . 0 3 . 32 . 2 2 . 22 . 0 2 . 41 3 . 01 3 . 71 1 . 21 0 . 96 . 46 . 3 %1999 2000 Others 100% 100% Key trends Rationale Industry undergoes further consolidation Foreign players lose market share to local players Top five players in the market Changhong, TCl, Konka, Hisense, Skyworth,controlled 41.6% of the market in 1999 grew to 43.7% in 2000 Local players increased market share from 65% in 1999 to 67% in 2000 1.9 2.0 Rowa LG Panda Jinxing Skyworth-RGB Xoceco Philips Haier Panasonic Hisense Toshiba TCL Changhong Konka Sony SEC China010821BJ-Toshiba 21 DALIAN TOSHIBAS MARKET POSITION IN CHINAS PJTV MARKET: NO. 1 MARKET SHARE LEADER Source: GFK, internal interview, literature search, external interviews: Sony, Panasonic, Toshiba Key trends Rationale Established MNCs, Toshiba, Sony will continue to dominate market Local players start establishing themselves by 2005 High-end producers with superior technology in pixel resolution and brightness Local players expected to acquire key PJTV technologies as of 2003 As comparison, Changhong alone now controls 20% of large screen CRTV market, local players likely to gain similar share in PJTV market Market share by sales Percent Local (Konka Changhong, etc) Other MNCs Hitachi Panasonic Samsung Sony Toshiba 1999 2000 100% 35323332710151461534 3100% SEC China010821BJ-Toshiba 22 PJTV PLAYERS STRENGTHS AND WEAKNESSES Company Strengths/weaknesses Toshiba Strong brand name Aggressive sales and marketing Sony No. 1 brand name Premium market with highest industry profits Samsung Strong quality in resolution and brightness Solid position in the market Comparable technology with Japanese counterparts Other MNCs: Panasonic, Philips, etc. Possess the technology, but yet to establish themselves in market Local companies: TCL, Konka, Hinsense, Haier, Changhong Lack the key technologies for PJTV components tubes and screen Low-end brand have resulted in low sales volume Will fill up the technology gap by about 2003 Source: Lit search, McKinsey analysis SEC China010821BJ-Toshiba 23 TOSHIBA HAS A FULL-LINE PROUCT OFFERING IN NOTEBOOK, COVERING LOW-END TO PREMIUM SEGMENT Source: Literature research Key product offerings Satellite Series 2800 (13.3, 14.1, 15.0) Portege Series (7220CT, 3480CT, 3490CT) Tecra Series (8100H, 8000J, 8200) Satellite 1750 (13.3) New satellite 2800 (13.3, 14.1,15.0) Satellite Pro 4600 (13.3, 14.1, 15.0) New Satellite Pro 4600 (14.1) Satellite 3000 (13.3) Source: literature research SEC China010821BJ-Toshiba 24 TOSHIBA IS STRONG IN EDUCATION, LARGE AND MEDIUM BUSINESS, BUT PARTICULARLY WEAK IN GOVERNMENT Source: IDC 1 7 . 83 1 . 42 3 . 52 8 . 82 7 . 42 2 . 28 . 41 0 . 98 . 44 . 85 . 5Small office Home 100% = Toshiba Market average 73 484 Education Government Large business Small business Medium business 3.8 3.5 3.7 Sales by customer segments Percent of units shipment (000s), 2000 SEC China010821BJ-Toshiba 25 TOSHIBA IS GENERALLY A MEDIUM TO HIGH-END PLAYER, PARTICULARLY STRONG IN USD 2.5-3.5K PRICE BRAND Source: IDC 4 8 . 82 2 . 71 2 . 1 1 0 . 41 1 . 15 6 . 51 3 . 32 4 . 51 6 . 1 1 0 . 41 7 . 92 4 . 21 2 . 21 3 . 57 . 19 . 23 . 89 . 81 3 . 96 . 62 6 . 62 0 . 20.9 Low (0-2k) Medium (2-2.5k) High (2.5-3.5k) 100% = 0.11 0.12 0.17 0.7 3.5 1.4 0.1 0.08 Premium (3.5K) 2.2 Toshibas market share 0.1 Sales by customer segments Percent of units shipment (M), 2000 Others Dell IBM Founder Legend Acer Toshiba SEC China010821BJ-Toshiba 26 VALUE CHAIN STRATEGY 1. Background information Location Registered capital Management team Equity structure Starting year Number of employees Era analysis 4. Value chain strategy 5. Organization and ownership 6. Financial performance Focus on Marketing, advertising and promotion Distribution (channel and sales force) Organization structure Ownership structure Sales Profit 2. Strategy 3. Product/market Mission Vision Corporate strategy Key product offerings Market position SEC China010821BJ-Toshiba 27 Source: Literature Search, Konka web site, team analysis R&D Manufacturing Marketing & Sales Distribution After-Sales Services Toshiba Digital Media Network Company is responsible for Color TV R&D Dalian Toshiba is responsible for TV production. 30% parts come from China Dalian Toshiba and its 4 subsidiaries in Dalian, Beijing, Shanghai and Guangzhou are responsible for marketing and sales Dalian Toshiba primarily uses sales forces in its four subsidiaries to se