Value Chain Assignment
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Value Chain Assignment 2008 MBA/ENG 290G International Competition in Technology Team 1 • Team 1: Cloud 1 Project: Software cloud • Franck Formis - franck_formis[at]mba.berkeley.edu • Vincent Wai-Shan Ng - vincentng[at]berkeley.edu • Jameson Slattery - jameson_slattery[at]mba.berkeley.edu • Robert Ka Chun Kong - rkong[at]berkeley.edu • Chuohao Yeo - zuohao[at]eecs.berkeley.edu 2 PC Value Chain Analysis MBA 290G.1 9/24/2008 Team 1: Franck Formis, Robert Kong, Vincent Ng, Jameson Slattery & Chuohao Yeo Acer value chain and its dependencies Distribution & R&D Components Manufacturer Marketing •Apacer •Toshiba •Wistron •Channel Business •AQR •Fujitsu •BenQ Model – indirect •Kingdom Corp. •Sony •AMBIT •Resellers •Animeta System •Hitachi •ALi partnership •Mitsubishi •Aegis •Global •Lite-On Semiconductor distributor •IBM •Yam Digital Tech. •Acer Computer •Ambit •Legend Tech. •Logistron Service •Sumida •RDC Semiconductor •Broadwalk Capital •Sanyo •Feiya Tech. Red – heavy presence by Acer 4 Blue – no or light presence by Acer Example 5 Source: http://somo.nl/html/paginas/pdf/Acer_Incorporated_Company_Prof_2005_EN.pdf Asus value chain and its dependencies •R&D center •Chips •Motherboard •Eee PC •Sales, •Sales, •Core •Logic IC •LED display •Ultra marketing marketing technology •PCB •Sound blaster Mobile PC and PM and PM center •Connectors •Eee PC •phone groups groups •DRAM •Intel, nVIDIA etc •Procurement and material management center Red – heavy presence by Asus 6 Blue – no or light presence by Asus Dell Value Chain Marketing & R&D Components Design Manufacture Support Sales Current portfolio Global network of Covers assembly, Direct sales model Software & of 1954 patents technology software inst., •Dedicated sales peripherals companies functional testing, •Telephone-based Use a wide variety and quality control sales Services of Intellectual Large number of •Online •Infrastructure Property vendors Build-to-order consulting services agreements model Indirect sales •Deployment services HW VARs (Dell Partner •Asset recovery & AMD Organized in 3 BUs: Direct), main recycling services Intel Americas Americas channel for •Training services EMC Texas 7 locations outside U.S •Support services Seagate EMEA •Managed services … 3 locations Organized around APJ APJ customer SW China 3 locations segments Microsoft India Ubuntu (Linux) Singapore Gaming desktop Citrix Taïwan manufactured … through Alienware (subsiduary) Red – heavy presence by Dell 7 Blue – limited presence by Dell HP value chain and its dependencies Support & R&D Testing Components Assembly Sales Services •PSG •PSG •ODMs •PSG •Direct •PSG •HP Labs •ODMs •CMs •CMs •Retailers •TSG •ODMs •Third-party •OEMs •Resellers vendors •ODMs •Distribution partners •Independent distributors •OEMs •Independent software vendors •Systems integrators PSG – Personal systems group Red – heavy presence by HP 8 TSG – Technology solutions group Blue – no or light presence by HP Lenovo PC Value Chain Technology Manufacturing/ Sales & Software & R&D Design Inputs Assembly Marketing Services HW Components Lenovo R&D centers Lenovo design Lenovo has 4 Direct (Web, Lenovo extended AMD located in China, centers manufacturing telephone) warranties and Intel Japan and the facilities in China financing Sony United States Still reliant upon Distributors, VARs, Sanyo casings, etc. from EMS/ODM Partners technology Increasing emphasis Samsung ODM partners also component Quanta implementors on differentiating SW Seagate participate in suppliers Compal on top of Windows Western Digital product R&D Wistron IBM Global Micron Hon Hai Services Channel partners Texas Instruments Leverage R&D Inventec involved in reverse Panasonic investments of HW Retail partners logistics Hitachi component and SW Backward Toshiba vendors integration into Transaction and Fujitsu subassembly of PC Relationship Kingston components modes of selling Lenovo motherboards Software Microsoft Adobe Symantec Red – heavy presence by Lenovo 9 Blue – limited presence by Lenovo Comparison of PC Value Chains • Same core set of component and software suppliers across all PC vendors – Minimal feature differentiation across vendors • R&D still seen by most as a way to differentiate their products – Still little differentiation – Minimal R&D investments compared to other high-tech industries • Dell’s use of the direct sales model minimizes its reliance on distributors, retailers and other channel partners • HP and Lenovo are attempting to differentiate through software – HP “skunkworks” team working on an alternative to Windows – Lenovo could follow HTC’s strategy in mobile – develop a custom UI on top of Window • Oustourced vs. in-house manufacturing – Acer, Dell and HP outsource to EMS partners – Asus and Lenovo maintain manufacturing facilities while attempting to move up the value stream • Lenovo and HP are heavily reliant on “solution selling” – distributors, VARs and integration partners delivering PCs as a component of an overall service package – Lenovo is particularly reliant on IBM Global Services – HP Personal Systems Group relies on Technology Solutions Group and EDS • Consumer PC players rely on retailers – Best Buy, Circuit City, other category killers 10 Dell & Box.net • A partnership to offer online storage services for Dell’s Inspiron Mini 9 (subnotebook) • Dell’s bet on online computing revolution (Data Center) • Potentially a similar spin-in strategy than Cisco ‘s (e.g. Andiamo, Nuova) • Link alliance through partnership to limit risk (limited funding) instead of JV or M&A • Harness R&D efforts and impact on capital markets 11 Direction of PC industry • Vertical dis-integration – Most components are commoditized and outsourced • Focus on marketing, branding and distribution – Move from products to services (not only support) • PC value chain gets subsumed – Other parts play larger roles, needs for Corporate Governance PC value Data R&D Software End user chain center 12 Key linkages in value chain • Companies provide support to their customers, or the next partner in the value chain – For example, if Dell sells through BestBuy, then BestBuy can provide support to the end user. If Dell sells the PC to end user directly, they have to provide customer support. • Customer feedback or the last part of the value chain provide linkage and guidance to every other partner in the value chain – End user preference directs R&D directions, component choices, and marketing strategies 13 Team 2 • Team 2: Cloud 2 Project: Software cloud • David Exposito Cossio - david_exposito[at]mba.berkeley.edu • Rachel Vera Simon - rachel[at]ieor.berkeley.edu • Jon Wiesner - jon_wiesner[at]mba.berkeley.edu • Emrehan Kirimli- emrehan[at]berkeley.edu 14 Team 2: Jon Wiesner, Rachel Simon, David Exposito Cossio, Yanpei Chen, Emrehan Kirimli Comparing PC Value Chains Dell, HP, Acer, Asus, and Lenovo Dell Firm Visionary founder. Worldwide operations. Currently cutting Infrastructure operating expenses: downsizing employees and facilities. Hedging activities protected from impact of weakening dollar. Human ~ 90,500 (majority abroad); activities associated with recruiting, resource development, and compensation of employees. Technological increased 22% this year to $610 million. Focus on shortening Development development cycle & tailoring regional solutions for international growth. Strengthening IT & sever offerings. Relationships over integration. Quality components. Flexible Procurement purchasing to adjust for cost, needs, quality, availability. Inbound Outbound Marketing & Sales Operations Service Logistics Logistics •Just in time •Direct sales •#1 in personal PC warehousing, model – systems in U.S., and •High Customized minimal insight into #2 worldwide quality assembly of inventory; made- customer •Adding new channels support, systems for to-order for needs •Adjusting to new customer user specs demand and no •Online markets: payment access to old technology ordering upon delivery help info Hewlett Packard Firm 6 business units. Highly decentralized. Presence globally. In the Infrastructure process of reducing the number of facilities to reduce costs. Human resource 172000 employees. Extensive training for sales force. Technological Strong R&D culture.$3.6B invested in 2007 (3,4% of net Development revenues). They capitalize with patents and licensing technology. Procurement Huge negotiating power. Always use secondary sources of supply. High volume to reduce costs. Inbound Outbound Marketing & Operations Service Logistics Logistics Sales Consumer and HP offers One of the Manufacture Extremely commercial consulting biggest in high volume of complex to customers. service and High Tech basic product reach huge Currently customer industry configuration number of reinvesting in support. Very to maximize customers increasing important for efficiencies sales force HP strategy Acer Firm Spun off manufacturing operations in 2000. Low capital costs Infrastructure business model. Human Outside of administrative and management functions, all resource employees fulfill sales, marketing, customer service or R&D roles. Technological Incorporates advanced feature sets in high end brands. Focused Development on worldwide growth in notebooks and ultra-mobile devices. Procurement Seeking scale and efficiencies through acquisitions in major markets Inbound Outbound Marketing & Operations Service Logistics Logistics Sales •Outsources •Lean •Channel •Purchased •Small manufacturing operating Business brand names in investments in •Spun off model Model major markets service manufacturing •Minimize