Toshiba Case Study

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Radio broadcasting in the early 20th century brought the first major consumer product, the broadcast receiver. Later products included telephones, personal computers, MP3 players, audio equipment, televisions (first cathode ray tube TVs, then in the 2000s, flatscreen TVs), calculators, GPS, automotive electronics (car stereos), video game consoles, electronic musical instruments, karaoke machines, digital cameras and players and recorders using video media such as VCRs in the 1980s and 1990s, followed by DVDs and Blu-ray discs. Stores also sell digital cameras, camcorders, cell phones and smartphones. In the 2000s, most products have become based on digital technologies, and have largely merged with the computer industry in what is increasingly referred to as the consumerization of information technology.

Industry Drivers

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Key Success Factors

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PORTERS FIVE FORCES

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Bargaining Power of Suppliers

Since the need for quality raw materials in this industry is crucial, the bargaining power of suppliers can be medium in intensity. It will not be easy for Toshiba to go from one supplier to another in a short period of time.

Bargaining Power of Customers

Consumers doesn’t have the bargaining power because they can choose to stay with regular DVD formats if they find Blu-ray DVD expensive. Movie studios can be considered to have the bargaining power.

Threat of Substitutes

As of the moment, there are other video formats existing in the market and the role of consumers is to just choose. This is generally medium as Toshiba’s format

Threat of New Entrants

Blu-Ray and HDDVD have already dominated the high definition media market. Both have had more than a year to develop infrastructure as well as find support from other large corporations in related markets. It will be unlikely that a new standard could enter the market.

Intensity of Rivalry

There is heavy competition because anyone with a license can make a HD player. Blu-Ray player manufacturers will compete with not only HDDVD player manufacturers but other Blu-Ray manufacturers as well. Similarly, Blu-Ray companies will also have to contend with DVD player manufacturers.

Problem Identification

There was a war for formats and standards. The war was about the company to set a new standard for HD quality for DVDs. This higher quality must come with clearer presentation, more capacity and greater protection.

Issue behind the Problem

- To win the war the company must:

- Develop superior technical performance

- Build industry Support

- Make the product cheap to produce

- Gain customer acceptance

- Organize backward compatibility

- Warner, which was supposed to be Toshibas industry support, backed out and supported Sony instead

CASE QUESTIONS

- What were the competitive advantages of the two rival DVD formats?

Toshiba’s format has more quality and lesser price. On the other hand, Sony’s format has greater capacity and managed to cut-price to almost the same as Toshiba’s.

- Using innovation flow process in Section 5.3, how would you analyze the development position of the two companies? Could Toshiba still come up with a version when the technology became more mature? If so, what should be the strategy for such a development?

The business development for the two companies was great in terms of customers, market and innovation. They both can create a design and learned how to innovate them. But, the advantage Sony has is with its long term relationship to its alliance that made them won the format war. Yes, Toshiba can still come up with a better version of the technology. With the innovation flow process, they can come up with better designs. A good strategy to use is the differentiation strategy, which would create a different and new feature on the DVD standards.

- What lessons can we learn from format wars for strategy dynamics?

Strategy should be able to estimate the implications both short-term and long-term, to meet future needs usually by understanding of present and known needs. Another lesson, the need to find a loyal industry support first before pursuing the idea of joining the war. In an industry like this in order to match-up or survive against competitors the firm must have a resource and capabilities that will be learn from the other firms from another industry. Lastly, be able to sustain the product with continuous innovation on the quality and production.

- PLAN OF ACTION

STRENGTHS

S1: Diversified manufacturer of wide range of products

S2: Significant part of sales revenue spent on R&D

S3. The brand has a huge product portfolio from consumer electronics to computer accessories

S4: Potential in branding and promoting through TVC

WEAKNESS

W1: Inability to support own advocacy (regarding HD DVD)

W2: Limited market share

W3: Unstable financial status

OPPORTUNITIES

O1: Increasing use of technology in various industries like retail stores

O2: Growing demand for healthcare equipment with developing