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SECChina010821BJ-IBMCONFIDENTIALPCCompetitorAnalysis:IBMSAMSUNGELECTRONICSCHINA(SECChina)Thisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.Aug,2001SECChina010821BJ-IBM1OVERVIEWOFCOMPETITORANALYSISFRAMEWORK4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysisSECChina010821BJ-IBM2BACKGROUNDINFORMATION1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricingSECChina010821BJ-IBM3IBMHASGRADUALLYEXPANDEDITSPRESENCEINCHINALocationBeijingManaging

directorZhouWeikunStartingyear1984(representativeoffice)1992(IBMChinaCo.Ltd.)Numberof

employeesOver3000Key

milestonesSetupIBMCustomerAssociationin1984OpenedBeijing,Shanghai,Shenzhen,Chengdu,Guangzhou,Nanjing,Xian,ChongqingofficesEstablishedcustomerservicenetworkcoveringdozensofChinamajorcitiesSetupChinapurchasingcenter*inShenzhenBackgroundinformation *IBM’spurchaseinchinahasincreasedfrom30MUSDin1993to1BUSDin1998 Source: LiteratureresearchSECChina010821BJ-IBM4BACKGROUNDINFORMATION4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysisSECChina010821BJ-IBM5GLOBALLY,IBMHASDECIDEDTOEXITPCBUSINESSGRADUALLYINTHENEXTSEVENYEARSMissionToleadinthecreation,developmentandmanufacturingoftheindustry’smostadvancedinformationtechnologies,includingcomputersystems,software,networkingsystems,storagedevicesandmicroelectronicsTotranslatetheseadvancedtechnologiesintovalueforourcustomersthroughourprofessionalsolutionsandservicesbusinessesworldwideVisionTobeno.1playergloballyininformationproducts,solutionproviderandserviceprovider * IBM'sPCbusinessshowed/surprisingstrengthinrevenuegrowthandprofitabilityintheSeptemberquarterlastyearSource: LiteratureresearchStrategyShiftproduct-orientedstrategytoindustry-orienteddevelopmentstrategyDefineE-commerceasfocusofIBMbusinessinChinaPositionPCaspartofEoN(edgeofthenet)conceptinsteadofastandaloneproductGraduallyexist*PCbusinessinthenextsevenyearsgloballybysellingittoDellwithDell'spromisetopurchaseIBM'scomponentsinreturn2001targetIncreaserevenueby20% *IBM’sPCbusinessshowedsurprisingstrengthinrevenuegrowthandprofitabilityintheSeptemberquarterlastyear,whichwouldlessentheurgencytoexitthisbusinessinthenearterm Source: LiteratureresearchSECChina010821BJ-IBM6

Source: IDCDesktopPCmarketsharePercentofunitsshipment(m)OthersIBMGreatWallFounderLegend100%=4.56.6Growthrate

percent44.820.313.987.6125.494.799009900Growthrate

percent100%=2.94.868.524.9170.6193.5121.6128.565.018.8OthersFounderDellAcerLegendIBMToshibaNotebookmarketsharePercentofunitsshipment(m)IBM’smarketshareIBMKEPTITSMARKETPOSITIONINNOTEBOOK,BUTITSDESKTOPPCBUSINESSFAILEDTOCATCHUPWITHTOTALMARKETGROWTHSECChina010821BJ-IBM7PRODUCT/MARKET4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysisSECChina010821BJ-IBM8IBMISRIGIDLYANDAGGRESSIVELYIMPLEMENTINGTOTALSOLUTIONANDSERVICEPROVIDERSTRATEGYINPRODUCTOFFERINGKeyproductofferingsSource: LiteratureresearchProductcategoryProductcategoryDesktopPCNotebookNetVistacommercialPCNetVistaA40NetVistaA10NetVistaA20-6269BSCNetVistaA20-634587C/634586CNetVistaMulti-mediaPCNetVistaX40iNetVistaA60iNetVistaA40iNetVistaA20i-21949DC/219415CNetVistaA20i-219755C/21978DCNetVistaA10iThinkPadAseriesThinkPadTseriesThinkPadXseriesThinkPadiseries

Source: literatureresearchSECChina010821BJ-IBM9IBMISPARTICULARLYSTRONGINGOVERNMENTANDSMES,BUTWEAKINHOMEANDEDUCATION,THETYPICALLOCALPLAYERS’TERRITORIES

Source: IDCSalesbycustomersegmentsPercentofunitsshipment(000s),2000SmallofficeHome100%=IBMMarket

average2646,564SmallbusinessEducationMediumbusinessGovernmentLargebusinessSmallofficeHome100%=IBMMarket

average83484EducationGovernmentLargebusinessSmallbusinessMediumbusinessDesktopPCmarketNotebookmarket2.32.93.93.53.74.8SECChina010821BJ-IBM10IBMISADOMINANTHIGH-ENDPLAYER,GRASPINGOVER20%MARKETSHAREOFHIGH-ENDDESKTOPPCANDOVER50%OFPRIMIUMNOTEBOOKMARKETSource: IDC,interviewOthersDellCompaqGreatWallIBMHPFounderLegend2.82.82.75.32.1Low

(0-1k)Medium(1-1.5k)High

(>1.5k)100%=1.8DesktopPCmarket,199943.618.43.72.60.4OthersDellIBMFounderLegend0.9Low

(0-2k)Medium(2-2.5k)High

(2.5-3.5k)100%=Notebookmarket,20000.110.120.170.73.51.40.1AcerToshiba0.08Premium(>3.5K)Pricebrand

USD15.101.51.52.25.7IBM’smarketshareSalesbycustomersegmentsPercentofunitsshipment(M)SECChina010821BJ-IBM11VALUECHAINSTRATEGY4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysisSECChina010821BJ-IBM12IBMHASSETCHINAASONEOFKEYBASESINITSGLOBALR&DGlobalresearchbases8globalresearchbasesTotalstaffaround4,000 * UnderconstructionSource: Literatureresearch,interviewChinaR&DbaseEstablishedin1995(IBMisoneofthefirstMNCsthatsetupR&DcenterinChina)Staffedover100peopletoresearchcenterandover200peopletodevelopmentcenterResearchfocusesareChinaspecifictechnologysuchaslanguagerecognition,hand-writinginputandcomputerizedtranslationtechnologyapplicationinChina-specificenvironmentandindustrysolution;developmentfocusiscurrentlyapplicationsoftwareR&DU.S.(3)Japan(1)Switzland(1)China(1)Isreal(1)India*(1) *underconstructionSource: IDC,interviewSECChina010821BJ-IBM13IBMWILLNOTFURTHERINVESTINBUILDINGUPPCMANUFACTURINGJVSINCHINAManufacturingManufacturing

baseGreatWallITproductsShenzhenCo.,Ltd.(IBM'ssolePCproductionbaseinChina)OEMeffortsOEMmostlytoTaiwaneseplayers,suchasAcerStrategyNofutureinvestmenttosetupmorePCmanufacturingJVsinchinaEmphasisonOEMapproachSource: Literatureresearch,interviewSource: literatureresearch,interviewSECChina010821BJ-IBM14IBMISPUSHINGTOWARDFLATTENEDCHANNELSTRUCTUREANDSECONDANDTHIRDTIERCITIESINGEOGRAPHICCOVERAGESalesanddistributionGuidingprinciplesChangeprogramPushforflattenedchannelstructureExpandtosecond/thirdtiergeographicareasIncreasesalesrevenueby20%in2001“Bluestarplan”Source: Literatureresearch,interviewDistributionchannelCitycoverageTarget3,000–4,000dealersDirectandstrongchannelmanagementandcontrol

byIBMCurrentOver2,000dealersNodirectchannelmanagementbyIBMOver30citiesOver200citiesSource: literatureresearch,interviewSECChina010821BJ-IBM15IBMEMPHASIZESANDFOCUSESONTOTALSOLUTIONANDSERVICEPROVISIONTotalsolutionandserviceTargetTobeNo.1globallyasatotalsolutionproviderandserviceproviderInitiatives“BlueVproject”StartedglobalimplementationinMarch,2001TargetsatNetGens,companiesthatconductbusinessmainlyontheInternetplatformProvidescustomershardware,software,consulting,training,salesandmarketing,financing,out-sourcing,andpotentialpartnershipopportunities“Hardware+Software+Service”Source: Literatureresearch,interview"Competitioninthenextthreeyearsisbasedonthestrengthsinhardwareandsoftware.Inthe5years’time,servicewillbeanotherkeysuccessfactor"–ZhouWeikun,ManagingDirector,IBMChina

Source: literatureresearch,interviewSECChina010821BJ-IBM16ORGANIZATIONANDOWNERSHIP4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysisSECChina010821BJ-IBM17IBMFOLLOWSCHINAHEADQUARTERHOLDINGP&LRESPONSIBILITYANDCUSTOMER-ORIENTATIONPRACTICE

Source: Interview,"VirtualTeam"practicebyfacilitates/coordination???KeytakeawaysIBMChinaheadquarterholdstheP&Lresponsibilityofallthebusinessgroups.TheonlyexceptionisChinaResearchcenterthatreportsdirectlytoR&DglobalcenterIBMembodiescustomer-orientationinorganizationstructure.The.comandtelecomaretoprovidetotalsolutiontotargetcustomers“Virtualteam”practicefacilitatescoordinationamongdifferentbusinessgroupsservingsamecustomersOrganizationIBMChinaCo.,ltdSMB.comTelecomIGSSoftwaregroupPCTechno-logygroupServerResearch

centerSource: literatureresearch,interviewDesktopPCNote-bookSECChina010821BJ-IBM18IBMHOLDSTHEMAJORITYOFITSPCMANUFACTURINGJVINCHINAOwnershipstructureGreatWallComputerGroupIBMGreatWallITProductsShenzhenCo.,Ltd.30%70%Source: LiteratureresearchSource: literatureresearch,interviewSECChina010821BJ-IBM19FINANCIALPERFORMANCE4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferings1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysisSECChina010821BJ-IBM20IBM’SNOTEBOOKBUSINESSHASBEENGROWINGVERYFAST,BUTDESKTOPPCHASBEENVERYSTAGNANTFORTHEPASTTHREEYEARSSales(RMBbillions)NotebookRevenue19992000199898-00CAGRPercentSource: IDCDesktopPCRevenue19992000199898-00CAGRPercent2.12.62.72.769.00.81.22.4SECChina010821BJ-IBM21IBMHASBEENGROWINGINREVENUEANDIMPROVINGINNETMARGIN Source: AnalystreportProfitabilityPercentNetmarginGrowthratePercentGrossmargin1999200019992000Financialperformance87.588.00.6RevenueUSDbillions893736GrowthratePercent-2.71999200012.5Source: annualreportSECChina010821BJ-Toshiba22OVERVIEWOFCOMPETITORANALYSISFRAMEWORK1.BackgroundinformationLocationRegistered

capitalManagement

teamEquity

structureStartingyearNumberof

employeesEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyKeyproductofferingsMarketpositionSECChina010821BJ-Toshiba23BACKGROUNDINFORMATION1.BackgroundinformationLocationRegistered

capitalManagement

teamEquity

structureStartingyearNumberof

employeesEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyKeyproductofferingsMarketpositionSECChina010821BJ-Toshiba24Source:Toshibawebsite,LitsearchBACKGROUNDINFORMATION–TOSHIBAEstablished:1875byHisashigeTanakaPresident&CEO:TadashiOkamuraTotalAssets:US$51,578millionShareholders’Equity: US$10,054millionNumberofemployees:190,000worldwide(AsofSeptember30,2000)DomesticPlants,BranchesOfficesAndOtherFacilities:Productionfacilities:25Branchoffices:35Salesoffices:23OverseasPlants,BranchesOfficesandOtherFacilities:Offices:10Manufacturingcompanies:42Subsidiaries&affiliates:72SECChina010821BJ-Toshiba25Source:Companywebsite,LitsearchBACKGROUNDINFORMATION–DALIANTOSHIBATELEVISION,LTDLocation:Dalian,LiaoningProvinceStartingyear:1996RegisteredCapital:US$30millionUnitSold: colorTV1millionsets,50%export(Year2000)JointVenturePartnersTypeForeignJuristicPerson'sSharesForeignJuristicPerson'sSharesToshibaToshiba(China)Co.DalianDaxian(Group)Co.,Ltd.Numberofemployees:2,000Products: 21’–34’colorTV(CRT,Projection,Flat)DomesticJuristicPerson'sSharesSECChina010821BJ-Toshiba26Source:CompanyReport,LitsearchTOSHIBA’SCORPORATEMANAGEMENTTEAMPresident&CEOTadashiOkamuraCorporateprojectCorporatestaffCorporatesupportservicesiValueCreationCompanyCEO:TsutomuKawadae-SolutionsCompanyCEO:HirooOkuharaSocialInfrastructureSystemsCompanyCEO:TsuyoshiKimuraDigitalMediaNetworkCompanyCEO:AtsutoshiNishidaMobileCommunicationsCompanyCEO:TetsuyaMizoguchiPowerSystems&ServicesCompanyCEO:ToshiyukiOshimaSemiconductorCompanyCEO:TakeshiNakagawaDisplayDevices&ComponentsCompanyCEO:EisaburoHamanoMedicalSystemsCompanyCEO:MasamichiKatsuradaHomeAppliancesCompanyCEO:MakotoNakagawaSECChina010821BJ-Toshiba27

Source: Companywebsite,LiteratureSearchHISTORYOFTOSHIBASECChina010821BJ-Toshiba28

Source: LiteratureSearch;McKinseyAnalysisTOSHIBA’SDEVELOPMENTWENTTHROUGHTHREESTAGESOrganizationstructure

Corporatestrategy

ProductDevelopment&Technology

1875-1939TwoJapaneseelectricalequipmentmanufacturersmergedin1939tocreateToshiba.Technologicalinnovationaccountedforthecompanies’successes.Oneofthefounderswastheso-calledEdisonofJapan.Mainproductsincludedtransformers,electricmotors,lightbulbs,radioreceivers,andcathode-raytubes.1978-PRESENT1939-1978Thecompanygrewrapidlyandbecameamarketleaderintheelectricalandelectronicindustry.However,theorganizationbecamemorebureaucratic.Thecompanycontinuedtobeinnovativeintheearlyyears,producingmanyfirstsintheindustry.However,Itlostitsinnovatorimageinthe70’s.Numerousleadingproductsintheelectricalandelectronicsareas.ExamplesincludesJapan’sfirstvacuumcleaner,firstfluorescentlamp,firstradar,etc.ToshibashifteddirectionbyinvestingheavilyinITsegment.Theorganizationbecameincreasinglyglobal,employing190,000employeesworld-widewithannualsalesover￥5trillion.ITfocus,diversification,innovationandglobalizationarefourkeyelementsofToshiba’scorporatestrategy.ToshibaisintensivelyfocusingonIT-relatedbusiness(i.e.telecomandinternet),meanwhile,leveragingitslegacybusinessestogeneratestableincomeBusinessBuildingBecomingIndustryLeaderMeetingworldwidecompetitionSECChina010821BJ-Toshiba29

Source: LiteratureSearch;McKinseyAnalysisDEVELOPMENTOFDALIANTOSHIBA’STVBUSINESSINCHINAKeyinitiative

Keyresults

1996-1997Foundedasajointventurein1996,constructionwascompletedin1997.Conductedaccuratemarketforecastandimplementedjustinorderinventorymanagement.Inventoryturn-overlessthantwodays.Madeprofitthenextyear.20011998-2000FocusedonhighprofitmarginPJTVsegment,andcompetedontechnology,serviceandmanagementratherthanprice.StrengthenedcustomerserviceRevenueandprofitgrew50%annually.BecametheNo.1marketshareleaderinPJTVsegment.ToshibadecidedtorelocateitsdigitalTVproductiontoDalianandinvested￥300milliontoexpandcapacityfromonemillionunitsto1.5millionunitsexported800,000unitstoJapan.

BusinessBuildingEstablishingLeadershipinPJTVMarketBecomingToshiba’sKeyGlobalTVProductionBaseSECChina010821BJ-Toshiba30TOSHIBAWILLFURTHERINVESTINITINDUSTRYINCHINABackgroundinformation Source: Literatureresearch,interview "TosupportChina's10th5-yearplan,wewillenlargeourinvestmentinITindustry….Toshibahastheworld-leadingLCDrelatedandsemiconductortechnology.TheamountofeachinvestmentwillexceedIbillionUSD."“ApartfromJapan,Toshibadividesglobalmarketintofourregions,America,Europe,ChinaandtherestofAsia.Chinaistheonlyregionmadeupofonesinglecountry"ChiefrepresentativeofToshibainChinaInvestedcompaniesinChinaTotalinvestmentChiefrepresentativeTotalnumberofemployeesImportanceofChinaFutureinvestmentplan23RMB6billionPintianxinzheng(pinyin)over10,000ChiefrepresentativeofToshibainChina

Source: literatureresearch,interviewSECChina010821BJ-Toshiba31TOSHIBAISTHELEADINGPLAYERINNOTEBOOKMARKETBOTH

INCHINAANDGLOBALLYTimeKeymilestones198519901993199419992000IntroducedthefirstnotebookintheworldIntroducedSTNnotebookIntroducedcolorTFTnotebookIntroducedPentium-empowerednotebookRankednumberoneinChinanotebookmarketfor4yearsRankednumberoneinworldwidenotebookmarketfor7yearsEraanalysisofToshibainNotebook

Source: literatureresearch,interviewSECChina010821BJ-Toshiba32STRATEGY1.BackgroundinformationLocationRegistered

capitalManagement

teamEquity

structureStartingyearNumberof

employeesEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsSECChina010821BJ-Toshiba33TOSHIBA’SMISSIONANDVISIONCorporatemission“We,theToshibaGroupcompanies,basedonourtotalcommitmenttopeopleandtothefuture,aredeterminedtohelpcreateahigherqualityoflifeforallpeople,andtodoourparttohelpensurethatprogresscontinueswithintheworldcommunity"Corporatevision“Togrowwithexcellenceastheleading-edge,internet-readyenterprisegloballybyacceleratinginnovationwithagility,andtocreatea21stcenturyofsuccesshandinhandwithourcustomers"

Source:Companywebsite,Litsearch.SECChina010821BJ-Toshiba34THREESTRATEGIESPROPELTOSHIBATOBECOMEAGLOBALHI-TECHLEADERINTHENEWMELLIMUMToshibaasaleading-edge,internet-readygloballeaderinhi-techAcceleratethespeedofinnovationManagementInnovation(MI2001)isamajorinitiativebeingpromotedthroughoutToshibaGroup.ItisaimedatadvancingcreativedestructionandcompetitivesuperiorityChampionmarket-centricmanagementCustomerRelationshipManagementandSupplyChainManagementsystemswillbedeployedtocovercompany-wideoperations.Beinternet-readyDigitalManufacturing,anewsystem,willbeintroducedthroughouttheToshibaGroupAnITinfrastructureforcollaborativeengineeringwillbeestablished

Source:Litsearch,externalinterviews:ToshibaAnnualReportSECChina010821BJ-Toshiba35ASSESSMENTOFTOSHIBA'SCURRENTSTRATEGICPOSITION–SWOTStrengthsBroadanddiversifiedproductportfolioStrongpresenceinAsiaStrongR&DandmanufacturingcapabilitiesWeaknessesLesscustomerfocusedWeakbrandnameincutting-edgeinformationtechnologiesUnbalancedglobalpresenceOpportunitiesGlobaldigitalconvergenceEmergingtechnologies,

i.e.,Internet,3GChinajoiningWTOopensdoorstoforeigncompaniesThreatsBureaucraticmanagementstyleItscoresemiconductorbusinessisacyclicalcommoditybusinessBehindthecurveinkeyITdevelopmentsSECChina010821BJ-Toshiba36THEREARETWOSUCCESSFULMODELSINTHECHINACTVMARKET,DALIANTOSHIBAFOLLOWSTHESONYMODELTheKonkaModelCapitalintensive,aggressivegrowththrougheconomiesofscaleinmanufacturingandinthesalesforceFrom1993to1998KonkaacquiredTVmanufacturers:NortheastDuDanJian,SanXi,AnSuo,ChongQingfactoriestobulkupGrewcapacityby2millionunitsfrom1993to1998ThrougheconomicsofscaleandaggressivepricingKonkawasabletogrowmarketsharefrom3%to11%from1995to2000TheSonyModelZeroinonthehighend,highprofitsegmentofCRTTVmarketwithastrongbrandabletocommandpricepremiumsNotinastrongpresenceinunitmarketshare,butthetopbrandwhenconsumersrespondforthebrandqualityandreliabilityCorporatephilosophyunwillingtosacrificeprofitsforlargermarketshare(vastdifferentfromChineseplayers)Futuretargetfocusedonhigherend,cuttingedgetechnologyTVse.g.PJTV,DigitalTV,LCDandPDPwhichhavesignificantlyhigherprofitmargins.

Source:Litsearch,McKinseyanalysisSECChina010821BJ-Toshiba37TOSHIBASHIFTSITSSTRATEGICFOCUSTOAPPLICATIONSOLUTIONANDCUSTOMERSERVICEINCHINANOTEBOOKMARKETMissionTobethemostresponsibleITproductapplicationsolutionandserviceproviderTimeStrategicfocus1996199719981999ProductitselfChanneldevelopmentApplicationCustomerservice2000VIPcertificationfocusingoncorecustomersChanneldevelopmentinto2ndtiergeographiesApplicationsolutionof"mobileoffice"conceptToshibanotebookstrategy*inChinaStrategyevolvement *ToshibanotebookstrategyinChinaisco-developedbyDigitalChina,Toshiba’sexclusivenotebookchief-distributorinChina Source: literatureresearch,interviewSECChina010821BJ-Toshiba38PRODUCT/MARKET1.BackgroundinformationLocationRegistered

capitalManagement

teamEquity

structureStartingyearNumberof

employeesEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyKeyproductofferingsMarketpositionSECChina010821BJ-Toshiba39TOSHIBA’SGLOBALNETSALESBYBUSINESSSEGMENT Source: Toshibawebsite,LitSearchYea2000(￥billion)Information&Communications&IndustrialSystems￥1,858PowerSystems￥571ElectronicDevices&Components￥1,477DigitalMedia￥1,518HomeAppliances

￥660Others

￥473SECChina010821BJ-Toshiba40DALIANTOSHIBA'sKEYTVPRODUCTOFFERINGSColorTVs(inch,modelno.)ProjectionTVSeries:43’–61’61D9UXC50D9UXC43D9UXC50D8UXC43D8UXC

Source: Companywebsite,LitsearchCRTTVSeries:21’–29’29D2DC29D2XC25D2XC25E3DC321D2NC

FlatTVSeries:21’–34’34D8UXC34D6DC29D8UXC29D6DC29D3XC25D6XC21AF6C

SECChina010821BJ-Toshiba41DALIANTOSHIBA’SMARKETPOSITIONINCHINA’SCONVENTIONALCRTTVMARKET:NO.5MARKETSHARELEADERMarketsharebysales,% Source: GFK,McKinseyAnalysis,Externalinterviews:Konka,Sony,Toshiba19992000Others100%100%KeytrendsRationaleIndustryundergoesfurtherconsolidationForeignplayerslosemarketsharetolocalplayersTopfiveplayersinthemarket–Changhong,TCl,Konka,Hisense,Skyworth,controlled41.6%ofthemarketin1999grewto43.7%in2000Localplayersincreasedmarketsharefrom65%in1999to~67%in20001.92.0RowaLGPandaJinxingSkyworth-RGBXocecoPhilipsHaierPanasonicHisenseToshibaTCLChanghongKonkaSonySECChina010821BJ-Toshiba42DALIANTOSHIBA’SMARKETPOSITIONINCHINA’SPJTVMARKET:NO.1MARKETSHARELEADER

Source: GFK,internalinterview,literaturesearch,externalinterviews:Sony,Panasonic,ToshibaKeytrendsRationaleEstablishedMNCs,Toshiba,SonywillcontinuetodominatemarketLocalplayersstartestablishingthemselvesby2005High-endproducerswithsuperiortechnologyinpixelresolutionandbrightnessLocalplayersexpectedtoacquirekeyPJTVtechnologiesasof2003Ascomparison,Changhongalonenowcontrols~20%oflargescreenCRTVmarket,localplayerslikelytogainsimilarshareinPJTVmarketMarketsharebysalesPercentLocal(KonkaChanghong,etc)OtherMNCsHitachiPanasonicSamsungSonyToshiba19992000100%100%SECChina010821BJ-Toshiba43PJTVPLAYERS’STRENGTHSANDWEAKNESSESCompanyStrengths/weaknessesToshibaStrongbrandnameAggressivesalesandmarketingSonyNo.1brandnamePremiummarketwithhighestindustryprofitsSamsungStrongqualityinresolutionandbrightnessSolidpositionint