CONFIDENTIALPCCompetitorAnalysis:IBMSAMSUNGELECTRONICSCHINA(SECChina)Thisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.Aug,2001SECChina010821BJ-IBMOVERVIEWOFCOMPETITORANALYSISFRAMEWORK4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis1SECChina010821BJ-IBMBACKGROUNDINFORMATION1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing2SECChina010821BJ-IBMIBMHASGRADUALLYEXPANDEDITSPRESENCEINCHINALocationBeijingManaging

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

employeesOver3000Key

milestonesSetupIBMCustomerAssociationin1984OpenedBeijing,Shanghai,Shenzhen,Chengdu,Guangzhou,Nanjing,Xian,ChongqingofficesEstablishedcustomerservicenetworkcoveringdozensofChinamajorcitiesSetupChinapurchasingcenter*inShenzhenBackgroundinformation *IBM’spurchaseinchinahasincreasedfrom30MUSDin1993to1BUSDin1998 Source: Literatureresearch3SECChina010821BJ-IBMBACKGROUNDINFORMATION4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis4SECChina010821BJ-IBMGLOBALLY,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: Literatureresearch5SECChina010821BJ-IBM

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,BUTITSDESKTOPPCBUSINESSFAILEDTOCATCHUPWITHTOTALMARKETGROWTH6SECChina010821BJ-IBMPRODUCT/MARKET4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis7SECChina010821BJ-IBMIBMISRIGIDLYANDAGGRESSIVELYIMPLEMENTINGTOTALSOLUTIONANDSERVICEPROVIDERSTRATEGYINPRODUCTOFFERINGKeyproductofferingsSource: LiteratureresearchProductcategoryProductcategoryDesktopPCNotebookNetVistacommercialPCNetVistaA40NetVistaA10NetVistaA20-6269BSCNetVistaA20-634587C/634586CNetVistaMulti-mediaPCNetVistaX40iNetVistaA60iNetVistaA40iNetVistaA20i-21949DC/219415CNetVistaA20i-219755C/21978DCNetVistaA10iThinkPadAseriesThinkPadTseriesThinkPadXseriesThinkPadiseries

Source: literatureresearch8SECChina010821BJ-IBMIBMISPARTICULARLYSTRONGINGOVERNMENTANDSMES,BUTWEAKINHOMEANDEDUCATION,THETYPICALLOCALPLAYERS’TERRITORIES

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

average2646,564SmallbusinessEducationMediumbusinessGovernmentLargebusinessSmallofficeHome100%=IBMMarket

average83484EducationGovernmentLargebusinessSmallbusinessMediumbusinessDesktopPCmarketNotebookmarket9SECChina010821BJ-IBMIBMISADOMINANTHIGH-ENDPLAYER,GRASPINGOVER20%MARKETSHAREOFHIGH-ENDDESKTOPPCANDOVER50%OFPRIMIUMNOTEBOOKMARKETSource: IDC,interviewOthersDellCompaqGreatWallIBMHPFounderLegend5.32.1Low

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

(>1.5k)100%=1.8DesktopPCmarket,199943.60.4OthersDellIBMFounderLegend0.9Low

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

(2.5-3.5k)100%=Notebookmarket,20000.1AcerToshiba0.08Premium(>3.5K)Pricebrand

USD2.25.7IBM’smarketshareSalesbycustomersegmentsPercentofunitsshipment(M)10SECChina010821BJ-IBMVALUECHAINSTRATEGY4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis11SECChina010821BJ-IBMIBMHASSETCHINAASONEOFKEYBASESINITSGLOBALR&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,interview12SECChina010821BJ-IBMIBMWILLNOTFURTHERINVESTINBUILDINGUPPCMANUFACTURINGJVSINCHINAManufacturingManufacturing

baseGreatWallITproductsShenzhenCo.,Ltd.(IBM'ssolePCproductionbaseinChina)OEMeffortsOEMmostlytoTaiwaneseplayers,suchasAcerStrategyNofutureinvestmenttosetupmorePCmanufacturingJVsinchinaEmphasisonOEMapproachSource: Literatureresearch,interviewSource: literatureresearch,interview13SECChina010821BJ-IBMIBMISPUSHINGTOWARDFLATTENEDCHANNELSTRUCTUREANDSECONDANDTHIRDTIERCITIESINGEOGRAPHICCOVERAGESalesanddistributionGuidingprinciplesChangeprogramPushforflattenedchannelstructureExpandtosecond/thirdtiergeographicareasIncreasesalesrevenueby20%in2001“Bluestarplan”Source: Literatureresearch,interviewDistributionchannelCitycoverageTarget3,000–4,000dealersDirectandstrongchannelmanagementandcontrol

byIBMCurrentOver2,000dealersNodirectchannelmanagementbyIBMOver30citiesOver200citiesSource: literatureresearch,interview14SECChina010821BJ-IBMIBMEMPHASIZESANDFOCUSESONTOTALSOLUTIONANDSERVICEPROVISIONTotalsolutionandserviceTargetTobeNo.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,interview15SECChina010821BJ-IBMORGANIZATIONANDOWNERSHIP4.Valuechainstrategy5.Organizationandownership6.FinancialperformanceFocusonMarketing,

advertisingand

promotionDistribution(channel

andsalesforce)OrganizationstructureOwnershipstructureSalesProfit2.Strategy3.Product/marketMissionVisionCorporatestrategyMarketpositionKeyproductofferingsKeycustomersPricing1.BackgroundinformationLocationManagement

teamStartingyearNumberof

employeesEraanalysis16SECChina010821BJ-IBMIBMFOLLOWSCHINAHEADQUARTERHOLDINGP&LRESPONSIBILITYANDCUSTOMER-ORIENTATIONPRACTICE

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

centerSource: literatureresearch,interviewDesktopPCNote-book17SECChina010821BJ-IBMIBMHOLDSTHEMAJORITYOFITSPCMANUFACTURINGJVINCHINAOwnershipstructureGreatWallComputerGroupIBMGreatWallITProductsShenzhenCo.,Ltd.30%70%Source: LiteratureresearchSource: literatureresearch,interview18SECChina010821BJ-IBMFIN績ANC細(xì)IAL逗PE森RFO刃RMA蹲NCE4.Valu退ech陳ain偷stra弓tegy5.Org擾ani懂zat餡ion西an暖do開wne鞭r(nóng)sh屋ip6.Fin韻anc腹ial芽pe脈rfo攪rma時(shí)nceFocu值sonMark旨etin掙g,逼adve畢rtis棗ing今and護(hù)pro嘩moti疫onDis標(biāo)tri厘but倚ion烘(c捎han夾nel餓a哀nd即sal旦es撒for爽ce)Org衛(wèi)ani當(dāng)zat牧ion玻st銷ruc櫻tur槳eOwn弓ers看hip睬st含ruc付tur盯eSale翼sPro散fit2.Stra孟tegy3.Prod青uct/祖mark乞etMis斥sio柱nVisi鑄onCor糊por園ate灰st鄰rat鋤egyMark周etp得osit鈴ionKey網(wǎng)pr滅odu蟲ct船off懸eri鍬ngs1.Bac保kgr晌oun救di余nfo僚rma金tio秒nLoc戰(zhàn)ati杜onMan誦age辭men息t

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e扶mplo百yeesEra龜anal戚ysis19SEC藏Chin立a010鳴821B歇J-IB揚(yáng)MIBM晃’S甚NOT覽EBO絞OK秩BUS說INE慌SS廊HAS款BE醋EN秒GRO賞WIN膨GV聰ERY濟(jì)FA敲ST,鍋BU茫TD肌ESK改TOP智PC且HA鞭SB擇EEN欺VE加RY朝STA蠅GNA礎(chǔ)NT濫FOR展TH就EP認(rèn)AST宜TH插REE潔YE兄ARSSale并s(R葛MBb虧illi麗ons)Note畫book鬼Re烏venu皇e199貸9200米0199898-總00哲CAG問RPer獲cen訂tSou牲rce鎮(zhèn): I身DCDesk器top紙PC竊Reve肆nue1999200乖0199898-0絮0CA告GRPer熊cen谷t2.769.020SEC躬Chin冒a010濁821B宜J-IB稿MIBM東HA從SB類EEN傷GR吐OWI顆NG孩IN丑REV袋ENU尾EA發(fā)ND增IMP帆ROV紅ING抽IN征NE條TM躺ARG浩INSou劃rce乏: A嗎nal土yst態(tài)re低por古tPro盈fit貸abi讀lit根yPer慈cen請(qǐng)tNet顫ma乖rgi盤nGro先wth鐮ra竭tePer類cen面tGros撞sma拴rgin199棋9200019992000Fina竟ncia才lpe塞rfor決manc蠻e87.慶588.00.6Reve河nueUSD白bill蚊ions893736Grow省thr紅atePer腔cen賢t-2.71999200端012.淋5Sou岸rce河: a罷nnu德al探rep賀ort21SEC補(bǔ)Chin智a010巨821B鞠J-IB倆M9、靜夜四螺無鄰，荒器居舊業(yè)貧窩。。2023罰/4/2峰92023太/4/2紐奉9Satu脖rday毫,Ap穿ril撕29,盈202310、雨中街黃葉樹橋，燈下壘白頭人齒。。202呀3/4宏/292023庸/4/2梢9202菠3/4振/294/29第/202招31:山02:0饑4PM11、以我源獨(dú)沈久晴，愧君外相見頻策。。2023班/4/2妙92023播/4/2糾92023源/4/2蜻9Apr帳-2329-A萌pr-2疫312、故人錫江海別展，幾度來隔山川護(hù)。。202持3/4筍/292023古/4/2蓄92023漿/4/2預(yù)9Satu霉rday喊,Ap育ril掉29,努202313、乍見翻薪疑夢(mèng)，相欣悲各問年劑。。2023眨/4/2兵9202攪3/4朱/29202槳3/4碑/292023敗/4/2穴94/2戰(zhàn)9/2峰02314、他鄉(xiāng)生竿白發(fā)，舊覽國見青山衫。。29眾四月袍202揮3202株3/4坐/292023曠/4/2梳9202版3/4呆/2915、比不全了得就痕不比，呀得不到筑的就不附要。。得。四月2棕32023烘/4/2況9202壁3/4鍬/29202沖3/4摘/294/2癥9/2啞02316、行動(dòng)椒出成果堤，工作撒出財(cái)富若。。2023廈/4/2晃9202呢3/4暴/2929A感pril比202衣317、做前嫩，能夠?qū)h(huán)視四天周；做命時(shí)，你懷只能或?yàn)⒄咦詈镁刂悦浤_為起才點(diǎn)的射問線向前松。。202文3/4蠶/292023搖/4/2蠟9202營3/4四/292023差/4/2傘99、沒有臟失敗，銹只有暫醬時(shí)停止捐成功！某。2023搶/4/2參9202診3/4耳/29Sat罩urd修ay,抗Ap社ril量29萍,2銷02310、很多獨(dú)事情努嚴(yán)力了未洋必有結(jié)轎果，但兵是不努禁力卻什伏么改變攻也沒有焦。。202雞3/4自/292023擇/4/2御9202蛋3/4煤/294/2的9/2吳023壩1:每02:海04嗚PM11、成功稈就是日怨復(fù)一日辛那一點(diǎn)號(hào)點(diǎn)小小刻努力的腹積累。浸。2023屢/4/2縮慧9202設(shè)3/4添/29202俗3/4仁/29Apr-逢2329-威Apr鈔-2312、世間成幣事，不求把其絕對(duì)圓鄙滿，留一輪份不足，忌可得無限饅完美。。202率3/4顆/29202泰3/4拼/292023奴/4/2棍9Satu講rday概,Ap藍(lán)ril釀29,威202313、不知科香積寺