Hitachi Ltd - Consumer Electronics -
Japan
Hitachi Ltd
Strategic Direction
·
After its structural reform in
2005, Hitachi Ltd now focuses on creating ubiquitous value (uValue) which
interconnects business, lifestyle and communities. Hitachi Ltd will seek to
achieve higher sales and profitability during the forecast period and it will
do this by leveraging its research and development efforts toward the
generation of profit. The company expected to achieve 5% profit improvement by
2008.
·
Faced with deteriorating
earnings, the company was determined to cut costs by improving its
manufacturing capabilties. Hitachi engaged in a new corporate strategy under
the theme of “collaborative creation
profits.“
·
Through the steady execution of
its new initiative during the forecast period, Hitachi is expected to achieve a
consolidated operating margin. There remains a need, however, for appropriate
restructuing measures in order to ensure the company’s growth.
Key Facts
·
Hitachi is expects to perform
well in the consumer electronics industry, given its appropriate positioning.
The company wants to take its long-developed infrastructure and create optimal
value, or ”uVALUE,” for its customers, combining its experience, knowledge and
expertise for use in a broader range of businesses.
·
Hitachi faces the challenge of
finding a wider consumer base for its
digital consumer electronics products, including plasma and LCD
flat-panel TVs, LCD projects, HDD/DV recorders, mobile phones and optical disk
drives. Hitachi has recently introduced its new generation of audio/visual
devices that incoporate digital terrestial broadcasts.
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Full name
of company:
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Hitachi Ltd
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Address:
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6-6
Marunouchi 1-Chome, Chiyoda-ku, Tokyo 100-8280
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Tel:
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+81-3-3258-1111
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Fax:
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+81-3-4564-4074
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WWW:
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www.hitachi.co.jp
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Activities:
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Manufactures
plasma and LCD flat-panel TVs, LCD projects, HDD/DV recorders, mobile
phones, mobile computers and optical
disk drives
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Source: Euromonitor International from
Hitachi Ltd
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2004
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2005
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2006
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Net sales
(¥ in billions)
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1,280.3
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1,305.7
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1,506.0
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Net profit
(¥ in millions)
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8.7
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(35.8)
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45.7
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Number of
Employees
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34,458
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34,458
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41,690
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Source: Trade press, Hitachi Ltd company
reports, Euromonitor International estimates
Company Background
·
Hitachi Ltd is part of the
Hitachi Group and one of the key players in the consumer electronics market.
Hitachi is well-positioned in the in-home and portable consumers electronics
sector, as its core business and production competencies allow it to
successfully address the continuing demand of Japanese consumers for products
such as plasma and LCD flat-panel TVs, LCD projects, HDD/DV recorders, mobile
phones, mobile computers and optical disk drives.
·
In 2006, earnings declined in
consumer electronics due to lower sales prices for flat-panel TVs and DVD
recorders.
·
The company established the
Hitachi Research and Development Corporation for research China, to further
support the business.
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Hitachi Ltd maintains regional
distribution systems concentrated in key Japanese cities.
Production
·
Hitachi Ltd supplies the
domestic market from production facilities inside Japan. The company exports
some products to markets in North America, Europe and China.
·
It maintains production
operations outside the country, as well. In 2006, Hitachi opened new production
operations for digital flat-panel televisions in the Czech Republic and in
Malaysia.
·
Hitachi supplies LCDs and HDDs
to other companies.
Competitive Positioning
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Hitachi positions itself in the
high end of the market. In 2006, the company posted a volume share of nearly 2%
in the Japanese consumer electronics sector, ranking 13th among key players.
This share remained steady over the review period due to the effectiveness of
restructuring process the company underwent and courtesy of the wider product
portfolio it engaged.
·
In 2006, Hitachi showed losses
in the HDD, LCD panel and flat-panel TV subsector due to high production costs.
Nevertheless, there is a plan to increase sales of LCD for TVs, focusing on
small and medium-sized LCDs. Hitachi is considered one of the innovators in the
market. In 2006, the company introduced IPS (In-Plane Switching) technology
which enables a display to be seen even at an angle.
·
In 2006, Hitachi initiated a
joint venture with Toshiba and Matsushita to mass produce large LCDs for TVs.
This means that, while it tries to maintain its leadership position in the
market, it must also embark on some niche positioning to survive, deriving
stronger share in a limited number of subsectors.
·
Hitachi has positioned itself
in the most dynamic areas in the market, including digital televisions,
portable cameras and portable computers. The increasing demand for such
products drove growth in Hitachi’s market share during the review period.
·
Hitachi Ltd recently expanded
its operations into other markets, including information infrastructure. In
2006, it produced radio frequency identification (RFID) chips or “u-chips,”
that included the finger vein authentication systems for bank ATM machines.
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Subsector
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Volume
Share
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Rank
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Televisions
and projects
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8.6
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6
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TV and
VCR/DVD combinations
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12.4
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3
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Desktops
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7.1
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8
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Camcorders
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9.4
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5
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Portable
media players
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8.3
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3
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Laptops
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9.6
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4
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Source: Trade press, Hitachi company reports,
Euromonitor International estimates
