Change management in an Economy of Speed

Transcription

1 Change management in an Economy of Speed APO Study meeting June 23, 24 Hyderabad India Risaburo NEZU Fujitsu Research Institute Growth of high- and medium-high-technology exports, annual average growth rate, or closest available years 4 3 Manufacturing 2 1 Japan Italy Switzerland Norway Sweden France Denmark Germany Australia OECD Spain New Zealand United States Korea EU Slovak Republic Austria Portugal United Kingdom Canada Netherlands Belgium Finland Ireland Greece Turkey Mexico Poland Czech Republic Hungary Iceland Hightechnology industries *OECD total excludes Czech Republic, Luxembourg, Korea and Slovak Republic. Czech 93-, Slovak 97-, Korea 94- Source; OECD, STAN database, May 23. 1

2 6 Share of semiconductor in the world market Japan Europe Asia (Except Japan) Japanese position in international trade '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 Canada Mexico Japan Germany China Source; Department of Commerce 3

3 Value-chain of IT equipments -Integrated approach VS Modular approach - Fabless (silicon valley) and Foundry (Taiwan) - Japan does everything at home. profitability Structure of value chain After-sales, R&D, D&D Service, Support Procurement Logistics Manufacturing TIME Source: Nikkei Business July 8, 22 4 Comparison of of Industry Structure (( METI) and Asia realized high profitability by focusing on the areas of strength Japan marked low profit as it spread its resources to all fields - As a result, Japan was driven into a vicious circle of low investment and poor competitiveness Japan Industry structure A Asia Design Houses Semiconductor Software Computer Hitachi Fujitsu NEC Intel Microsoft Sun Microsystems IBM Samsung TSMC ( foundry ) Network cisco Lucent Digital Appliances Matsushita Sony Motorola Samsung 5

4 Semiconductor product mix (2) JPN Europe Korea 1% 8% 6% 4% 2% % Toshiba Hitachi Fujitsu INTEL IBM Micron ST micro Philips Infenion Samsung Hyundai Mos memory Mi com. Logic Linear Digital CCD OPT Discrete HIC Source: Semiconductor Industry Research Institute Japan 6 Procurement of components from Taiwan $1M JPN EU Total of top 1 Companies Total of top 5 Companies ' JPN '1 EU Source:adapted from Ministry of Economic Affairs ( Taiwan ) 7

5 Trade in IT products (millions of Dollars) Exports of goods, balance of payments basis, excluding military 718, , ,761 Computers, peripherals, and parts 47,555 38,553 39,928 Semiconductors 45,66 42,235 46,158 Telecommunications equipment 27,874 22,28 2,748 Other office and business machines 2,894 2,23 1,924 Imports of goods, balance of payments basis, excluding military 1,145,927 1,164,746 1,263,17 Computers, peripherals, and parts 74,1 75,15 76,522 Semiconductors 3,422 26,15 24,68 Telecommunications equipment 24,632 23,135 24,766 Other office and business machines 4,864 4,468 7,136 Source; Department of Commerce 8 Shares in the global server market (22) HP Dell IBM Sun Microsystems NEC Fujitsu Hitachi Gateway Siemens Solectron Flextronics Acer Quanta Others the volume of shipments Brand % 2% 4% 6% 8% 1% Source; The Semiconductor Industry News, 26 November, 23 9

6 Shares in the global mobile phone market (22) Nokia Motorola Samsung Siemens Sony Ericsson LG Electronics Alcatel Panasonic Mobile Communications Kyocera Phillips Others Flextronics Hon-Hai Solectron NEC the volume of shipments Brand % 2% 4% 6% 8% 1% Source; The Semiconductor Industry News, 5 November, 23 1 Market reorganization in Semiconductor fields Memory (DRAM) System (1999) Joint investment in kind System Withdrawal System Two top companies were integrated into globally competitive one. Others withdrew from the market. (April 23) transfer of business System LSI (November 22) Partition 22 Appointing former president of Japan TI to CEO. Investment from Intel Adapted from METI report Withdrawal System Flash memory Comprehensive alliance Withdrawal System (April 23) Jointly newly-established firm FUJITSU Semiconductor Division Toshiba Semiconductor Company Competitive Projects of Public and Private ( HALCA, MIRAI, ASPLA Group Group 11

7 Fortune 5 Computer and Office equipment 1982 ( Mainframe ) 1992 ( Mini-Computer ) 22 ( PC ) 1 IBM IBM IBM 2 Sperry Hewlett-Packard Hewlett-Packard 3 Honeywell Digital Equipment Compaq Computer 4 NCR Unisys Dell Computer 5 Burroughs Apple Computer Sun Microsystems 6 Digital Equipment Pitney Bowes Xerox 7 Control Data Compaq Computer Gateway 8 Pitney Bowes Sun Microsystems NCR 9 Wang Laboratories Seagate Technology Apple Computer 1 Wang Laboratories Pitney Bowes 12 Top 1 Japanese IT companies 1981 Matsushita Hitachi Toshiba Mitsubishi Electric Nihon Electric Sony SANYO Fujitsu 21 Hitachi Sony Matsushita Toshiba NEC Nihon Electric Fujitsu Mitsubishi Source; Fortune Global 5, 13

8 Evolution of IT industry ? Mainframe/ Minicon PSTN IBM, ATT, Alcatel, Siemens, NTT, Fujitsu, NEC PC/Internet () DELL,SUN, CISCO, HP INTEL Mobile phone (Europe) NOKIA, ERICSSON, MOTOROLA, SAMSON ST Micro, TI Digital home electronics, Ubiquitous computing (Japan?) Sharp, Sony, Matsushita (convergence of AV, computer and Telecom) Proprietary OS UNIX, Windows Simbian, TRON,Linux? 14 Two opposing views TOYOTA SONY Continuous Improvement 15

9 Americanization of Toyota Latin America 2% Africa 3% Japan 28% Oceania 4% Middle East 5% Total 6.4million $ 23 Asia excluding Japan 1% Europe 14% North America 34% Source; Asahi shimbun 16 Smile curves applied to automobile and computer industries Automobile Computer and peripherals 14% 14% 12% 12% 1% 1% 8% 8% 6% 4% 2% % Materials And Parts Fabrication Service 6% 4% 2% % Materials And Parts Fabrication Service produced from input and output table by Fujitsu Research institute 17

10 Another evidence of doing as others do strategy (21) (%) Lucent Intel Motorola IBM GE Dell Computer EU Philips Siemens Abb Asea Brown Boveri Sony Fujitsu Matsushita Japan NEC Toshiba Hitachi Mitsubishi Source Japan Research Industries Association 18 Where Japanese strength lies in terms of number of parts number of parts , 1, 1, 1,, strength weakness Camera, machine tools, TV, auto chemical catalyst biotec Air craft, space OS 19

11 New product areas Japanese share 8 VTR Color TV 2 Japanese strength Desktop PC Japanese weakness Note PC PDA Mobile phone /1995 growth rates % 2 Number of patents granted in the (23) Rank Company No Rank Company No 1 IBM () 3, Samsung (Korea) 1,316 2 Canon(JPN) 1, Mitsubishi (JPN) 1,265 3 Hitachi (JPN) 1,96 13 Toshiba (JPN) 1,217 4 Matsushita (JPN) 1, NEC (JPN) 1,198 5 Hewlett-Packard () 1, General Electric () 1,139 6 Micron Technology () 1,78 16 AMD() 98 7 Intel () 1, Fuji Photo Film (JPN) 89 8 Phillips (Holland) 1, Seiko Epson (JPN) Sony (JPN) 1, TI () Fujitsu (JPN) 1,338 2 Bosch (Germany) 758 Source; Denpa Shimbun January 14, 24 21

12 Share of semiconductor in the world Top 2 23 Company Name 23 Revenue (Millions of $) Percent Change Percent Total Intel 27, % 14.9% Samsung Electronics 9, % 5.3% Renesas Technology 7,971 NM 4.4% Texas Instruments 7,85 2.2% 4.3% Toshiba 7, % 4.2% STMicroelectronics 7, % 4.% Infineon Technologies 7, % 3.9% NEC Electronics 5,75 8.7% 3.1% Freecale Semiconductor (Motorola) 4, % 2.5% Philips Semiconductors 4, % 2.5% Matsushita Electric 4, % 2.2% Advanced Micro Devices ( AMD ) / Spansion 3, % 2.2% Sony 3, % 2.% Micron Technology 3, % 1.9% Sharp Electronics 3, % 1.7% Hynix 3, % 1.7% Fujitsu 2,65-16.% 1.4% IBM Microelectronics 2, % 1.4% Qualcomm 2, % 1.4% Rohm 2, % 1.3% Others 61,368.5% 33.8% Total Revenue 181, % 1.% Source isuppli Corporation, March ($billion ) World semiconductor market (22-27) opt (9.7) (CAGR % ) discrete (6.) analog (5.9) logic (1.8) MPU (8.4) memory (11.7) Source JEITA 23

13 The market size of semiconductor of 27 M$ The distribution of major electric devicesemiconductor market (Forecast) 1, consumer electronics computer CELLULAR DESK TOP PC communication NOTE BOOK PC automobile 1, CAR (BODY) CAR(DRIVE) PC SERVER CAR(INFO.) DSC TV GAME LCD MONITOR HDD ANALOG TV DIJITAL STB DVD BURNER DIGITAL TV DVD RECORDER 1, DVC AV INK-JET MFP DVD PLAYER RECEIVER LASER MFP INK JET PRINTER DVD-ROM Comb. CAR(ELECTRIC) HYBRID CAR LASER BEAM PRINTER DVD-ROM Market of semiconductor CAGR(3-7)=9% IP TELEPHONE PDA (Stand-alone) 1-2% % 2% 4% 6% 8% CAGR ( Compound Annual Growth Rate ) Source:JEITA, MAY24 24 Production of key IT products and components Jan-March 24 Lithium ion battery telecom relay station LCD television Digital camera Car navigation mobile phone fax circuit switching digital transmission equipment DVD video color TV PHS main frame computer mid-range computer PC weight(2) change from 2average Jan-March

14 Production of Semiconductor Jan-March 24 Active LC device (large) Active LC device (small) Optical exchange device Moss type device (logic) Moss type device (logic) mixed IC Micro computer CCD Passive LC device transistor linear weight(2) change from 2average Jan-March Intel TI IBM AMD Samsung TSMC Elpida Memory Mitsubishi Toshiba Company NEC Electronics Fujitsu Factories producing 3mm silicon ( existing and planned ) Location Ireland Korea Korea Taiwan Taiwan Japan (Hiroshima) Japan (Kochi) Japan (Oita) Japan (Yokkaichi) Japan (Yamagata) Japan (Mie) Investment 1million Yen 2,1 2,1 2,1 1,5 3, 2, 1,5 2, 2,6 2,3 1,6 2, 2, 2, 6 1,6 Date of Operation First half, 22 First half, 22 2Q, 22 First half, 22 Latter half, Q, 22 2Q, 22 2Q, 22 1Q, 22 September, 22 First half, 23 July, 24 Spring, 26 Latter half, 24 April, 25 Source; Fri Research based on various company s reports 27

15 Steel, metal Auto machinery Precision Electronics Shortening lead time Lead time Interval of model change Unit; Months World leading Companies in 21 Technical fields Companies No. of votes LCD Sharp 19 IC tag (RFID tag) Hitachi 18 Photo voltaic system Sharp 17 Hybrid car Toyota 15 Fuel cell Hydrogen-fueled car Toyota 12 Amino-acid Foods Ajinomoto 12 High capacity Optical Disk Sony 11 CCD / CMOS Sony 11 lithium-ion battery Sanyo 11 Electronic money Sony 1 Organic electro luminescence panel Sanyo 1 29

16 Japan 3 Key factors for corporate competitiveness -survey on 3 managers from Japan, Korea and China Flexibility to innovative changes Management style from long-term perspective Brand Ability of Managing Brand Competence of Cost Control Creation of New products and services Product Development ability Organaization Ability of Employee Qualification of Manager Korea China Japan Source; Nikkei Shimbun, March 24, 24 31

17 But, entrepreneurial spirit is still weak Source; Fortune, February 9, Solid ownership of shares is dissolving. Steady shareholders and tight cross holdings is declining. (%) Proportion of steady holdings in number cross holdings ( value) Proportion of steady holdings ( value base) Cross holdings (value) Source; White paper on international trade 23, METI NLI Research Institute 33

18 Cases M&As in Japan Number of cases (left scale) Rank value (right scale) (Million $ 25, 2, 15, 1 1, 5 5, footnote Rank value=transaction value including net debt Source; White Paper on International Trade 23, METI, Adapted from The Thomson Corporation s data 34 (cases) M&As in Japan by Foreign Investors ' '1 '2 Source; White Paper on International Trade 23, METI, Based on Financial & Economic Research Center of Nomura securities Co., Ltd. research 35

19 Bankruptcies of listed companies Billion Yen Total debts (left scale) Cases(right scale) (Cases) Source; White Paper on International Trade 23, METI 36 Introduction of performance based pays (%) (Note) 33 companies from 2547 listed companies Source; White Paper on International Trade 23, METI 46 Total less than 5 employees Over 1 employees

20 Ways to build IT system (%) Indirect jobs Direct jobs Average JPN JPN JPN Use package soft and very little customization Use package soft, but customize much Order made only Source WHITE PAPER Information and Communications in Japan 23, Ministry of Public Management, Home Affairs, Posts and Telecommunications 38 Amount of IT investment per one company JPN Amount of IT investment per company $ 6 million $ 9 million Cost of maintenance and operation relative to total IT investment (%) IT investment ratios to sales (%) Source WHITE PAPER Information and Communications in Japan 23, Ministry of Public Management, Home Affairs, Posts and Telecommunications 39

21 Information sharing through IT network Introduction of IT system for purpose of information sharing Purposes ( multiple answers) Gaining new customers, enhancing customer satisfaction Advancing quality of jobs Employee satisfaction and skill improvement Raising efficiencies of jobs % of firms that share information by IT across departments % of firms that share information by IT with supplier firms, clients and business partners % of firms that set up a special division to control the flow of information Source WHITE PAPER Information and Communications in Japan 23, Ministry of Public Management, Home Affairs, Posts and Telecommunications JPN (%) IT literacy of employees and training scheme JPN (%) % of firms with training programs % of rims with no training program No answer Training is provided, literacy is high Training is provided, but literacy level is not adequate No training but literacy is high No training and literacy is poor Source WHITE PAPER Information and Communications in Japan 23, Ministry of Public Management, Home Affairs, Posts and Telecommunications 41

22 Conclusion IT and globalization intensifies pressure for prompt and timely decisions. Firms have to choose strategies out of much wider options than before, outsourcing, M&A, collaborations with competitors. Bottom-up approaches, characteristics of Japanese firms, may be disadvantage, esp. in IT sector. Capital market has become more fluid, adding to pressure on firms for higher performances Products life cycle is getting shorter and shorter, so are lives of firms. Challenges for managers will be tougher and tougher 42