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,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Unit of measure,*,Source:,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 it is not a complete record of the discussion.,OVERVIEW OF COMPETITOR ANALYSIS FRAMEWORK,1.,Background information,Location,Registered capital,Managementteam,Equitystructure,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,1,BACKGROUND INFORMATION,1.,Background information,Location,Registered capital,Managementteam,Equitystructure,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,2,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: 72,3,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,4,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,5,Source: Company website, Literature Search,HISTORY OF TOSHIBA,6,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,7,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,8,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,9,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,10,STRATEGY,1.,Background information,Location,Registered capital,Managementteam,Equitystructure,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,11,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 21,st,century of success hand in hand with our customers,Source: Company website, Lit search.,12,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,13,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,14,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,15,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,16,PRODUCT/MARKET,1.,Background information,Location,Registered capital,Managementteam,Equitystructure,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,17,TOSHIBAS GLOBAL NET SALES BY BUSINESS SEGMENT,Source:Toshiba web site, Lit Search,Yea 2000 ( billion),Information & Communications & Industrial Systems 1,858,Power Systems 571,Electronic Devices & Components 1,477,Digital Media 1,518,Home Appliances,660,Others,473,18,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,19,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,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,20,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%,100%,21,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,22,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,23,TOSHIBA IS STRONG IN EDUCATION, LARGE AND MEDIUM BUSINESS, BUT PARTICULARLY WEAK IN GOVERNMENT,Source: IDC,Small 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), 2000,24,TOSHIBA IS GENERALLY A MEDIUM TO HIGH-END PLAYER, PARTICULARLY STRONG IN USD 2.5-3.5K PRICE BRAND,Source: IDC,0.9,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,25,VALUE CHAIN STRATEGY,1.,Background information,Location,Registered capital,Managementteam,Equitystructure,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,26,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 sell TV products directly to retailers. It also uses distributors in certain regions such as Chongqing.,Toshiba (China) helped set up the after-sales service network, and Dalian Toshiba is running the network and responsible for PNL.,Digital media,Digital Media,Network Co.,Dalian Toshiba TV Co.,TOSHIBA CHINA TV BUSINESS HAS A PRODUCT LINE ORIENTED VALUE DELIVERY SYSTEM,27,DALIAN TOSHIBAS TV DISTRIBUTION CHANNEL,Source: McKinsey Literature Search, external interviews, McKinsey analysis,Dalian Toshiba TV Co.,Manufacturing Plant,Dalian Subsidiary,Beijing Subsidiary,Shanghai Subsidiary,Guangzhou Subsidiary,Distributors,Retailers,:,Hyper/super-market: 10%,Designated Stores: 25%,Dept. Stores: 30%,Specialty Stores: 35%,Consumers,Subsidiary Sales Force,70%,30%,28,TOSHIBA ADOPTS THE NATIONAL CHIEF-DISTRIBUTOR PRACTICE IN NOTEBOOK BUSNIESS IN CHINA,R&D,Manufacturing,Marketing and branding,Sales and distribution,After-sales service,Toshiba R&D,Toshiba SH,OEM: Renbao, a Taiwanese OEM player,Digital China,Digital China (for Toshiba notebook only),Toshiba,Digital China,Centralize key accounts across different products,Centralize SI for key accounts (banking, tax),Be in charge of channel develop-ment and management,Digital China,Major responsibility,Toshiba SH factory,Parts inventory,Ancillary hotline,Toshiba,Toshiba SH,OEM,Toshiba,Toshiba SH,Dealers,Digital China,Source: interview,29,TOSHIBA HAS POSITIONED CHINA AS A KEY R&D BASE,*,The other two R&D centers are in the UK and the US respectively,Source:,Literature research,Three-layer structure of Toshiba R&D,First layer focusing on technology trends in the next 3-5 years,Second layer focusing on multi-media technology and technology trends in the next 2-3 years,Third layer focusing on product development,Toshiba R&D in China,Established R&D department in Beijing, April 2001,Plan to develop it into Toshiba (China) R&D center” in October 2001 which will be the third overseas R&D center of Toshiba,Plan to have 250 people this year and expand to 500 people in R&D center in 2005,R&D,30,TOSHIBA HAS OUTSOURCED THE MAJOR PART OF NOTEBOOK MANU-FACTURING AND ITS DISTRIBUTOR IS CAPABLE OF CUSTOMIZATION IN CONFIGURATION,Source:,Literature research, interview,Manufacturing,Parties involved,Responsibilities,Toshiba SH,Assembling production to cover total volume sold in China,Assembling production for expert,OEM (Renbao),Major part of notebook manufacturing,Digital China,Customization for big-batch order according to customers individualized demand for hardware configuration,31,UNDER STRONG COST PRESSURE, DIGITAL CHINA AND TOSHIBA ARE PUSHING TOWARDS MORE FLATTENED CHANNEL STRUCTURE,Source: CCID, interview,Channel Structure,Channel Cost,Percent of retail price,Digital China,Core distributors ( 50),Direct,Specialty shops (over 100),Industry distributors,End users,Second tier dealers (hundreds),Before 1997,1997-1998,1999-2001,Future expecta-tion of manu-facturers, 10,10,8-10,5-8,Pay sufficient attention to fast-growing customer segments, such as education and home, as well as major segments, such as government and business,Expand into 2nd-tier geographies and enhance channel,Channel strategy,32,DIGITAL CHINA IS BUILDING UP AN ADVANCED NATION-WIDE DISTRIBUTION NETWORK TO FURTHER CUT DOWN COST,Source:,Literature research
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