sec china010821bj-toshiba confidential brown goods and pc competitor analysis: toshiba samsung...
TRANSCRIPT
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
2
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
3
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
4
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 OfficesAnd Other Facilities:
Production facilities: 25Branch offices: 35Sales offices: 23
Overseas Plants, Branches Officesand Other Facilities:
Offices: 10Manufacturing companies: 42Subsidiaries & affiliates: 72
SEC China010821BJ-Toshiba
5
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 Person's Shares
Foreign Juristic Person's 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 Person's Shares
SEC China010821BJ-Toshiba
6
Source: Company Report, Lit search
TOSHIBA’S CORPORATE MANAGEMENT TEAM
President & CEOTadashi 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
8
Source: Literature Search; McKinsey Analysis
TOSHIBA’S 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- PRESENT1939-1978
• 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 70’s .
• Numerous leading products in the electrical and electronics areas. Examples includes Japan’s 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 Toshiba’s 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
9
Source: Literature Search; McKinsey Analysis
DEVELOPMENT OF DALIAN TOSHIBA’S 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.
20011998-2000
• 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 Toshiba’s Key Global TV Production Base
SEC China010821BJ-Toshiba
10
TOSHIBA WILL FURTHER INVEST IN IT INDUSTRY IN CHINA
Background information
Source: Literature research, interview
"To support China's 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
11
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
12
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
13
TOSHIBA’S 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
14
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
15
ASSESSMENT OF TOSHIBA'S 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
16
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
17
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, Toshiba’s exclusive notebook chief-distributor in China
Source: literature research, interview
SEC China010821BJ-Toshiba
18
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
19
TOSHIBA’S 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
20
DALIAN TOSHIBA's 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
21
DALIAN TOSHIBA’S MARKET POSITION IN CHINA’S CONVENTIONAL CRT TV MARKET: NO. 5 MARKET SHARE LEADERMarket share by sales, %
Source:GFK, McKinsey Analysis, External interviews: Konka, Sony, Toshiba
9.7 11.7
9.6 9.3
7.4 7.5
7.0 7.3
7.0 5.7
6.6 5.0
4.2 4.9
4.2 3.94.0 4.63.0 3.32.2 2.22.0 2.4
13.013.7
11.2 10.9
6.46.3%
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 2.0RowaLGPanda Jinxing Skyworth-RGBXoceco Philips Haier Panasonic Hisense
Toshiba
TCL
Changhong
Konka
Sony
SEC China010821BJ-Toshiba
22
DALIAN TOSHIBA’S MARKET POSITION IN CHINA’S 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 salesPercent
Local (KonkaChanghong, etc)Other MNCsHitachi Panasonic
Samsung
Sony
Toshiba
1999 2000
100%
35 32
3332
7 10
15 14
61~5 ~3~4 ~3
100%
SEC China010821BJ-Toshiba
23
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
24
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
25
TOSHIBA IS STRONG IN EDUCATION, LARGE AND MEDIUM BUSINESS, BUT PARTICULARLY WEAK IN GOVERNMENT
Source: IDC
17.831.4
23.5
28.8
27.422.2
8.410.9
8.44.8
5.5Small office Home
100% =
Toshiba Market average
73 484
Education
Government
Large business
Small business
Medium business
3.8 3.53.7
Sales by customer segmentsPercent of units shipment (000s), 2000
SEC China010821BJ-Toshiba
26
TOSHIBA IS GENERALLY A MEDIUM TO HIGH-END PLAYER, PARTICULARLY STRONG IN USD 2.5-3.5K PRICE BRAND
Source: IDC
48.8
22.712.1 10.4
11.1
56.513.324.5
16.1 10.4
17.9
24.212.2
13.5
7.1
9.2
3.8
9.8
13.96.6
26.620.2
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
Toshiba's market share
0.1
Sales by customer segmentsPercent of units shipment (M), 2000
Others
Dell
IBM
Founder
Legend
AcerToshiba
SEC China010821BJ-Toshiba
27
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
28Source: Literature Search, Konka web site, team analysis
R&D ManufacturingMarketing& 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 mediaDigital MediaNetwork Co.
Dalian Toshiba TV Co.
TOSHIBA CHINA TV BUSINESS HAS A PRODUCT LINE ORIENTED VALUE DELIVERY SYSTEM
SEC China010821BJ-Toshiba
29
DALIAN TOSHIBA’S TV DISTRIBUTION CHANNEL
Source: McKinsey Literature Search, external interviews, McKinsey analysis
Dalian Toshiba TV Co.Manufacturing Plant
Dalian SubsidiaryBeijing Subsidiary
Shanghai SubsidiaryGuangzhou Subsidiary Distributors
Retailers:Hyper/super-market: 10%
Designated Stores: 25%
Dept. Stores: 30%
Specialty Stores: 35%
Consumers Subsidiary Sales
Force
70%
30%
SEC China010821BJ-Toshiba
30
TOSHIBA ADOPTS THE NATIONAL CHIEF-DISTRIBUTOR PRACTICE IN NOTEBOOK BUSNIESS IN CHINA
R&D ManufacturingMarketing 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
ToshibaToshiba SH
OEMToshiba Toshiba SHDealers
Digital China
Source: interview
SEC China010821BJ-Toshiba
31
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
SEC China010821BJ-Toshiba
32
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
SEC China010821BJ-Toshiba
33
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)
DirectSpecialty 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
SEC China010821BJ-Toshiba
34
DIGITAL CHINA IS BUILDING UP AN ADVANCED NATION-WIDE DISTRIBUTION NETWORK TO FURTHER CUT DOWN COST
Source: Literature research, interview
Distribution
Key initiative • Build up a nation-wide logistics system
Total investment • RMB 65 million
Three-tier structure
• 3 first-tier centers in Beijing, Shanghai and Guangzhou• 7 second-tier centers• Third-tier components
Detailed practice • Providers deliver to three first-tier centers• Inventory is distributed among all the three tiers with
inventory cycle shortening from first tier to the third• SCM management is through IT network
SEC China010821BJ-Toshiba
35
DESPITE CONTINUOUS IMPROVEMENT, TOSHIBA NOTEBOOK’S CUSTOMER SERVICE STILL LAGS BEHIND IN CERTAIN ASPECTS
• VIP certificate
For A-class customers, Toshiba notebook guarantee includes response within 10 hours, and repair finished within 20 hours, otherwise offering a backup notebook
• On-site service
On-site service is offered in Beijing, Shanghai, and Guangzhou
• Dell and Acer offer 4-hour response commitment
• Dell offers on-site service in major cities in China
Customer service
*Footnote
Source: Source
Major initiatives
Competitor’sofferings
Source: Literature research, interview
SEC China010821BJ-Toshiba
36
ORGANIZATION AND OWNERSHIP
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
37
Source: Lit search, team analysis
TOSHIBA’S CORPORATE STRUCTURE
Statutory Auditors
Board of Directors
President & CEO
Corporate project
Corporate staff
Corporate support services
iValue Creation Company
e-Solutions Company
Social Infrastructure Systems Company
Digital Media Network Company
Mobile CommunicationsCompanyPower Systems & Services Company
Semiconductor Company
Display Devices & Components Company
Medical Systems CompanyHome Appliances Company
Japan Foreign Country
Dalian Toshiba TV, Ltd
Other JV
Other Subsidiaries
Japan Foreign Country
SEC China010821BJ-Toshiba
38
TOSHIBA’S MAJOR SHAREHOLDERS
Source:Toshiba website
(As of September 30,2000)
Entity Percent Outstanding
The Dai – ichi Mutual Life Insurance Company
The Sakura Bank,Ltd.
Nippon Life Insurance Company
State Street Bank and Trust Company
The Chase Manhattan Bank NA London
The Sumitomo Trust and Banking Co.,Ltd.
Employees Stock Ownership Plan
The Mitsubishi Trust and Banking Corporation
Mitsui Mutual Life Insurance Company
The Nippon Fire & Marine Insurance Co.,Ltd.
3.94%
3.88%
3.36%
2.55%
2.28%
2.27%
1.88%
1.68%
1.65%
1.55%
SEC China010821BJ-Toshiba
39
TOSHIBA HEADQUARTER HOLDS THE MAJORITY OF ITS NOTEBOOK MANUFACTURING JV IN CHINA
Source: Literature research
Ownership structure
Toshiba Toshiba China Co., Ltd Shanghai Jinqiao
Toshiba Computer (Shanghai) Co., Ltd
80% 10% 10%
SEC China010821BJ-Toshiba
40
FINANCIAL PERFORMANCE
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
41
TOSHIBA’S OVERSEAS SALES AND R&D EXPENDITURES
Overseas Sales( ¥ billion)
R&D Expenditures( ¥ billion)
Source: Toshiba 2001 Annual Report, Lit search
1998 1999 2000
CAGR=4.7%
1998 1999 2000
¥ 2,040¥ 2,116
¥ 2,235
2,000
1,500
1,000
500
0
¥ 323 ¥ 317
¥ 344
320
240
160
80
0
5.9 % 6.0 % 5.8 %
R & D Expenditures
Percentage of Net Sales
SEC China010821BJ-Toshiba
42
TOSHIBA’S HISTORICAL REVENUES AND PROFITS
Net Sales
5,522 5,458 5,9515,7495,301
CAGR = 1.9%
1997 1998 1999 2000 2001
Net Income
67
15
-9 -33
96
CAGR = 9.4%
*
Source: Toshiba 2001 Annual Report, Lit search
Yen billion
1997 1998 1999 2000 2001
SEC China010821BJ-Toshiba
43
IN 2000, DALIAN TOSHIBA’S UNIT SALES IN CHINA WAS 7% OF CHANGHONG’S UNIT SALES, BUT DALIAN TOSHIBA’S GROSS PROFIT IN CHINA WAS 89% OF CHANGHONG’S GROSS PROFIT
Unit Salesthousand
Dalian Toshiba Changhong
Source: 21st Century Economic report, March 19, 2001
Gross Profitbillion RMB
1.01.1
500
7,500
Dalian Toshiba Changhong
SEC China010821BJ-Toshiba
44
DESPITE OF STRONG GROWTH OF TOTAL MARKET, TOSHIBA NOTEBOOK HAS EXPERIENCED STAGNANT GROWTH OF 4.4% ANNUALLY
Notebook revenue (RMB billions)
Source: IDC
Toshiba in China
1999 20001998
98-00 CAGRPercent
Total China market
1999 20001998
98-00 CAGRPercent
48.6
4.8
6.1
10.6 4.4
1.6 1.51.7