Toshiba Corporation is the organization that has been selected for this assignment. This assignment is divided into three parts, question 1, question 2 and question 3. In the first question the company’s Current Market, Strategic Grid, Porter’s 5 Forces and Transformation Graph has been discussed. The second question regarding the acquisition of new information for Toshiba has been suggested and concluded according to the new information system acquisition.
2.0 Company Background
The name Toshiba was adopted in 1983 replacing Tokyo Shibaura Denki as the companies’ official name. The organizations main objective was creating the World’s First and World’s Number One products and services to overcome amid global competition and become an even powerful global contender. Toshiba Corporation continues its focus on restructuring businesses to reinforce their earnings whilst seeking to convert its whole business structure by pursuing growth sectors and upcoming businesses.
Toshiba’s aim is to become a much powerful global contender by pursuing the ‘concentration and selection’ approach while creating products and services that are cost-competitive and captivate customers (Toshiba, 2014). Toshiba manufactures products such as desktops, laptops, servers, scanners, printers and so on. Toshiba’s mission is to be one of the most successful company’s in the technology industry by giving their customers the finest quality service and experience. Offering high quality products, competitive pricing, innovative technology and best post sale service is what Toshiba focuses on.
2.0 Current Market
Current Toshiba has one of the top 5 largest market shares on the computer market in USA. Toshiba recently announced that it will accelerate the restructuring of its desktop business to focus on the B2B field which is profitable, and to control unstableness in the B2C business by huge downsizing measures, involving withdrawing from some B2C markets. They will continue to cultivate new business and customers. Toshiba will expand its broad product range by using the diversity of its business partners in the current business. (Toshiba, 2014)
Figure 1: Current Market Analysis
4.0 Porter’s 5 Forces
Figure 2: Toshiba’s Porter 5 Forces
Porter’s 5 Forces is a framework and tool used to improve the understanding of the current situation of an organization in the market or industry (NotesDesk, 2009). It evaluates and predicts the strength and position of the organization. For a clearer understanding and analysis of the current market there are 5 forces that are used. Which are Threat of New Entry, Bargaining Power of Buyers, Bargaining Power of Suppliers, Threat of Substitution and Competitive Rivalry.
Each of these 5 forces will help understand the competitive strength and the position of the organization compared to other organizations. “The five forces play an important role for Toshiba as it helps promote the relative attractiveness of the industry.” (Anthony, 2008) By using this tool the company will have a better understanding of its weaknesses and rectify them and have an advantage over their rivals.
4.1 Bargaining Power of Buyers
Customers have a wide range of products to choose from in the computer market. The demand is high and customers are always on the upper hand because they have lots of choices from different brands of products. This variety of choices has caused customers to be more price sensitive. If prices of a certain product are quiet high, customers will switch on to the next brand.
Organizations such as Toshiba depend on customers so they need to provide excellent customer service and reliable products which increase the relationship with customers. Toshiba has products directed towards single consumers, business and industries, which provide it a competitive advantage. They constantly come out with new products and upgrades on previous ones. One of Toshiba’s goals based on their Japanese heritage of the company is to protect global environment, which is a big plus for certain buyers who are environmentalists.
4.2 Bargaining Power of Suppliers
There are two types of suppliers for Toshiba which are divided into hardware and software suppliers. Toshiba products have great standards that are already set which are produced by focusing on innovative and quality products at low costs. Regarding the hardware, Toshiba have lots of suppliers who supply them with products and components such as mouse, keyboard, monitors, and printers and so on. Toshiba could switch suppliers at any time if they aren’t satisfied with the requirements provided by the supplier as there is a lot of demand in the technology industry.
Currently Toshiba’s main suppliers are Microsoft and Norton Security antivirus. Microsoft provides Toshiba with its operating system and other applications such as Microsoft Word, Excel, Office and so on. The hardware and software suppliers play an important role in terms of quality and pricing of the product in the computer industry. The bargaining power of suppliers is high for Toshiba in the market.
4.3 Threat of New Entry
The technology and computer industry is very complex and expensive. There are popular companies that are already there who are dominating the current market. This creates difficulty for new entrants into the market as it discourages them from entering. New organizations would require a huge investment of capital in the R&D department to create new products but the startup cost would be very high. As Toshiba is considered as a giant in the computer industry, they have the power and resources to reduce cost of products by purchasing in bulk and distributing them through retailers.
As customers are very vigilant on prices and quality of products, it creates difficulty for new entrants to enter the market as they can’t afford challenging bigger companies in terms of pricing. The loyal fan base that Toshiba have acquired won’t make it easier for new entrants as they are starting from scratch. Their experience and popularity retain their customers as they know they get up to date products and services. Due to this the threat of new entry in the computer marker is low.
4.4 Competitive Rivalry
The competition in the technology and computer industry is fierce as there are already existing manufacturers that are popular. A few of the main rivals in the current market are Apple, Sony, Dell, Hewlett Packard, Asus and many more. These popular brands compete with Toshiba in products like desktops and laptops. This common product that they manufacturer increases competition as all the giant companies want to outshine their competitor. These manufacturers produce low cost and high quality computers with the best operating system and specifications, which causes battle in terms of pricing. From this analysis a conclusion can be made that the competitive rivalry is high in the computer industry.
4.5 Threat of Substitution
Due to the rapid growth in technology in the market, companies are able to create new innovative products year in and year out. Manufacturers of smartphones and tablets affect Toshiba’s sales of computers and laptops. As smartphones these days are very popular in the eye of the customer, there are lots of companies offering these products. These companies are able to provide smartphones and tablets that can replicate all of the functions of personal computers and laptops, plus being small and portable. Their increasing popularity and performance of the smartphones and tablets such as faster processors, screen quality, specifications and so on. It affects Toshiba’s sales of their products, meaning the threat of substitution is high in the computer industry.
5.0 Application Portfolio Management (APM)
“APM is a management framework for IT decision makers primarily, CEOs and enterprise architects to work within. APM provides a portfolio of application assets that provide us with visibility into the enterprise that we would not have without it.” (Walker, 2007) Application portfolio management is also called McFarlan’s Strategic grid which is divided into four quadrants which are Support, Factory, Turnaround and Strategic. It’s an IT management technique to cut costs, reduce inefficiencies, and to promote agility in systems.
By using this strategic tool IT decision makers gain visibility into the applications impacts that occur in the business. A few of the information systems that Toshiba uses for the running of its business are Inventory Management System, Customer Relation System (CRM), Supply Chain Management System (SCM) and Performance Management System.
Figure 3: Transformation Graph
5.1 Support Quadrant
The first quadrant is the Support Quadrant. It is mainly used internally and improving process. This quadrant has a low impact on the dependency of the business and low impact on the strategy of the organization. Toshiba’s performance management system which monitors its employees performance helps increate the performance of Toshiba’s employee’s. This process looks at individual performances and career development of the business goals and results.
5.2 Factory Quadrant
The second quadrant is the Factory Quadrant. It has a low impact on the strategy and a high impact on the dependency of the business. It affects the operation improvements of the organization with the aim of reducing cost and better performance. At the moment the information system in the second quadrant is important although it has a low strategic impact in the future. An Inventory Management System is used to make sure of the availability of products at any given time for the satisfaction of consumers need. Toshiba’s objective to have 0 inventories in their system requires suppliers to be ready at any moment so that materials can be ordered or purchased. (Walton, 2012) To reduce wastage and cut costs Toshiba should always be stocked in materials to produce products.
5.3 Turnaround Quadrant
The third quadrant is the Turnaround Quadrant. This quadrant has a low impact on the dependency of the organization but a high impact on the strategy for the future of the company. It is in regards to the information system that the company will develop and use in the near future. One of those strategies of Toshiba is planning on is promoting the IoT (Internet of Things) by fully utilizing its strengths in PC technologies, wireless, and security. By deploying Internet of Things which interconnects technologies in various business domains, Toshiba Corporation will accelerate its business model that is not dependent on the sales of hardware alone but to deliver enhanced services and solutions. (Toshiba, 2014)
5.4 Strategic Quadrant
The fourth quadrant is the Strategic Quadrant. It’s the most important quadrant as it has a high impact on the dependency of the business and also high strategic impact. With this quadrant the organization will be able to understand and improve the main processes and at the same time generate strategies through the information systems. The customer relationship management system is used to market the products to customers who purchase online through the websites such as Amazon enabled with tracking information that notifies customers when there package is shipped and approximate time of arrival. Toshiba also has replacement parts and technical service area in their main webpage where consumers can receive help. Toshiba’s Supply Chain Management System is used to manage and record customer and supplier details. The system does the decision making as it helps understand inventory level, costs, components, peripherals and others. Its main objective is to reduce costs and increase turnover.
6.0 Transformation Graph
Figure 4: Transformation Graph
6.1 Level 1: Localized Exploitation
Localized exploitation is the basic one for leveraging IT functionality within a business. It starts at the base of the organization that is at the departmental level of how IT functionality is operated in the organization. Toshiba’s information system which is implemented by the inventory management system which has helped them reduce cost, employees and improve their manufacturing process. (Chun, 2005)
6.2 Level 2: Internal Integration
“The second level is a logical extension of the first, reflecting a more systematic attempt to leverage IT capabilities throughout the entire business process.” (Venkatraman, 1994) Internal Integration connects all the information systems or few of the information systems to make the business process more efficient. A network is created when the information systems are integrated which helps the company reduce cost and save time. The Customer Relationship Management System is connected to the Supply Chain Management System and Inventory Control System. Internal Integration helps Toshiba improve its business processing making them more stronger and competitive in the computer industry.
6.3 Level 3: Business Process Redesign
As Toshiba recently announced that it is shifting away from its consumer PC business and would cut 900 jobs globally as it restructures its business to focus on enterprise customers. The company is moving ahead with actively promoting the IoT (Internet of Things). By fully utilizing its differentiating strengths, Toshiba will offer innovative and appealing IoT products and services in areas such as infrastructure, healthcare, cloud and home appliances. Toshiba will speed up building a business model that isn’t dependent on sales of hardware alone by deploying Internet of Things which interconnects technologies in different business sectors, it helps incorporate the development of core technologies to provide enhanced solutions and services.
7.0 Acquisition of new Information System
The methods Toshiba use are In-housing and outsourcing in their current information system. Toshiba’s recently acquired in-housing system which is created by its Research and Development team. IoT (Internet of Things) is a system created by Toshiba as a unique strategy in the computer market. Through this system Toshiba will be able to enhance its core technologies to deliver better services and solutions to other business domains. While Toshiba might be moving away from producing consumer PC’s, the company will expand its wide product range, from workstations to tablet PC’s, together with its diversified business sales channels, and upgrade solutions by using the wide range of its business partners in the current business.
7.1 Benefits of In-Housing
There are many advantages for Toshiba to utilize In-housing based system. By using their own developed information system, Toshiba will be provided with more control over the business process and operations. As Toshiba is widely known company in the computer industry, their employees are capable of creating an effective information system with the experience they have. Reducing manufacturing cost is an objective for Toshiba which will be achieved by developing their information system. The company will be able to match their own business needs to perfection giving them a competitive edge over other companies. Toshiba would be more secure with their data as it will be themselves who will control the system.
Thus only authorized personnel will be able to use the information system. Like for example, the users of IoT will be able to use the system through intranet which is protected and authorizes access to personnel only through encrypted passwords. It will be connected with other information systems which Toshiba already have. The information system will be time consuming and effective as it is developed by Toshiba and only for their use. Data in the information system will be always up-to-date whenever Toshiba requires a new business process or function. Toshiba will be able to acquire more software developing experts to enhance their own information system as they will provide experience in the system development process.
From what is mentioned above we can conclude that the best acquisition method for Toshiba will be the In-housing methods as it is most suitable because of the specific requirements of Toshiba and how they process information efficiently. As mentioned earlier that through this system, Toshiba will become more efficient and increase its business process. Toshiba will further cut procurement and distribution costs by minimizing the number of platforms, and maximizing global business processes.
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