Strategic Analysis Of Emc Corp. Essay, Research Paper
I say, Don t put all your eggs in one basket is all wrong. I tell you, Put all your eggs in one basket, and then watch that basket. (Andrew Carnegie, 1885)-Quote in EMC Annual Report
EMC: Mission Statement- To make information accessible across the computing enterprise, regardless of the source or the target.
EMC: Introduction
EMC Corporation, based in Hopkinton, Massachusetts. with 11,200 employees worldwide, is the world s leading supplier of intelligent enterprise storage and retrieval technology. EMC is a Fortune 500 company and was ranked ninth on Business Week s 1998 Info Tech 100 list of the world s best-performing information technology companies. In 1998, EMC had an annual revenue of $3.9 billion. EMC designs systems for open system, mainframe, and midrange environments. EMC is the only company in the world entirely focused on rapidly delivering intelligent enterprise storage and retrieval solutions. This enables companies and organizations to leverage their growing volumes of information into profitability, growth and competitive advantage. EMC Enterprise Storage systems, software products, and services are the leading information access and storage solutions for every major computing platform in today s business enterprise.
EMC was founded in 1979 by Richard Egan and Robert Marino (the E and M in EMC) as a supplier of add-on memory boards. EMC s rapid rise in the worldwide data storage market began its major surge in 1989, when the company revised its strategy to align itself with businesses growing reliance on increasingly vast and complex amounts of electronic data. In 1990 with the introduction of EMC s Symmetrix product line, EMC became the first company to provide intelligent storage systems based on arrays of small, commodity hard disk drives for the mainframe market. Since the in introduction of Symmetrix technology, more than 30,000 of these systems have been sold around the globe and EMC s annual revenues have grown from $190 million in 1990 to $3.97 billion in 1998. With the introduction of Symmetrix Remote Data Facility in 1994, EMC became the world s leading storage-based solution for business continuity and disaster recovery. EMC s portfolio of storage software includes EMC TimeFinder, EMC Data Manager, EMC PowerPath and Symmetrix Manager. With its $445 million in software revenue in 1998, this makes EMC one of the world s largest and fastest-growing software companies.
The major customers of EMC include the world s largest banks and financial services firms, telecommunications providers, airlines, retailers and manufacturers, as well as governments, universities, and scientific institutions. These customers rely on EMC s innovative storage solutions for such applications as online reservation systems, transaction processing, customer billing, year 2000 compliance, the Internet and corporate intranets, business continuance/disaster recovery, data mining and data warehousing. EMC has also formed alliances with the world s leading software, application and database companies, such as Microsoft, SAP, Oracle, Baan, and PeopleSoft.
EMC is a global organization, and is represented by more than 100 offices worldwide. The company manufactures its products in Massachusetts and Ireland. EMC has R&D facilities in Massachusetts, Colorado, Israel, and France. They also have Customer Support Centers in Massachusetts, Ireland, Japan, and Australia. EMC holds the most strict quality management certification from the International Organization for Standardization (ISO 9001) and its manufacturing operations hold MRP II Class A certification. The company trades on the New York Stock Exchange under the symbol EMC and is a component of the S&P 500 Index.
EMC: Top Level Management
Richard J. Egan- Founder and Chairman Egan is a founder of EMC Corporation.. He has served as Director since the companies inception in 1979. In 1988, Egan brought the company public and was elected Chairman of the Board. He held the position of President and CEO until January 1992.
Michael C. Ruettgers- President and CEO Ruettgers has held the position of President and CEO of EMC Corporation, since January of 1992. Ruettgers joined the company in 1988 as executive Vice President of Operations and Customer Service, and from 1989 he was EMC s President and Chief Operating Officer.
EMC: Company Timeline
1979- EMC Corporation is founded by Richard j. Egan and Roger Marino in Newton,
Massachusetts in August.
1981- 64 kilobyte chip memory boards are developed for Prime Computers.
1982- EMC corporate headquarters moves to Natick, Massachusetts.
-Annual sales surpass the $3 million mark.
1984- Five years after the company s founding, annual sales reach $18.8 million, nearly tripling
1983 results.
1985- EMC is first to commercially ship denser memory upgrades using 1-megabit Random
Access Memory (RAM) technology.
1986- EMC goes public in April; makes initial public offering on the NASDAQ stock exchange.
-Total revenues double over 1985 to $66.6 million; net income more than doubles to $18.6 million.
1987- Corporate headquarters relocates to Hopkinton, Massachusetts.
1988- EMC opens its European manufacturing facility in Cork, Ireland.
-EMC stock lists for the first time on the New York Stock Exchange in March.
1989- Second major US corporate facility is opened in Hopkinton, Massachusetts.
-EMC develops Direct Access Storage Device (DASD) subsystems with automated error
thresholding for IBM System/38 and AS/400 computers.
-Michael C. Ruettgers, is promoted from Executive Vice President of Operations and
Customer Service, to President and Chief Operating Officer. Richard J. Egan continues his
role as Chairman and CEO
1990- EMC redefines mainframes storage by introducing the Symmetrix 4200 Integrated Cached
Disk Array (ICDA), a 24-gigabyte RAID mainframe storage system that replaces traditional
14 DASD disks with the mainframe industry s first 5.25-inch disks. Performance is further
enhanced through 4-gigabyte cache and 32-processor controller cards.
-EMC institutes a Continuous Quality Improvement process, resulting in greatly enhanced product and process quality, as well as over $20 million saved to date (1995).
1991- Several enhancements to the Symmetrix ICDA product line give EMC the ability to compete
in the Online Transaction Processing (OLTP) environment.
1992- Michael C. Ruettgers is named President and CEO and the company s stock splits 2 for 3.
1993- EMC mainframe storage market share increases from 5% to 15%.
1994- EMC introduces the world s first terabyte box and the company surpasses the $1 billion
annual revenue mark.
1995- EMC introduces first Symmetrix storage systems for open systems and surpasses IBM as
market share leader in mainframe disk storage capacity.
1996- EMC becomes leader in the open storage market.
1997- EMC extends lead in the enterprise storage and retrieval market.
1998- The EMC Effect is felt across the computing enterprise.
1999- EMC Corporation announces two-for-one stock split.
EMC: Porters Five Forces:
There are five forces that shape competition in an industry, barriers to entry, power of suppliers, power of buyers, threat of substitutes, and rivalry & industry structure. These five forces that Porter developed have become a strong framework in helping strategic mangers find answers as to how, or why decision can have an impact on their firm, and the industry they operate in. When analyzed the collective strength of these forces show potential profits of an industry. The company being focused on is EMC, which is in the Computer Peripherals industry.
Barriers to Entry:
Barriers to entry are forces that firms must overcome in order to enter an industry. These barriers can be caused from high initial investment, product differentiation, cost disadvantage, access to distribution channels, or restrictive government policies. An example of this could be the phone, or cable companies. There are very few companies that are able to compete within this industry because of the high capital requirements to start off. An enormous amount of time and money would have to be spent on installing lines throughout the country to supply you customers with the services they want.
EMC is in a situation where it has created several barriers to entry. Capital requirements are one of the barriers that EMC has in its favor. In 1979 EMC started its business in data storage which it is now the leading company in its industry. It has offices all over the globe and is the only company in the world to be specifically focused on rapidly delivering intelligent enterprise storage and retrieval solutions. There are very few companies that can compete with EMC because of its name association and large international operation. New entrance into this industry would have to invest large amounts of time and money into research and development. EMC already has the technology and is constantly updating with more advanced services.
Another barrier to entry is product differentiation. EMC is specialized in enterprise storage, which is much different than conventional storage. While conventional storage has been used to back up memory in case of a disaster or, to log companies transactions, EMC started a niche which it has made into a new industry. Enterprise storage has six specific parts that set it aside from conventional storage. They are as follows enterprise connectivity, information centricity, cascadability, information management, information sharing, and information protection. It can be clearly seen that this industry is constantly changing, and new products are coming out every day. If you are not the leader in this new technology then you will not survive. EMC has without a doubt developed barriers to entry.
Threat of Substitutes:
The threat of substitutes is how easily a product can be interchanged with another. For example if you are going to buy bottled water you decision will ultimately come down to price. An expensive flashy bottle of water can easily be exchanged for a generic store brand bottle at a fraction of the cost. However with services it is a different story. Lawyers for example could easily be substituted if you were looking at the cost. It would be very simple to find a cheap lawyer, however you might end up losing your case. To get a top of the line service you will have to pay a little extra. EMC is a top of the line service which also offers a very affordable pricing strategy. Its pricing very sensitive with the companies it works with, whether you are a world dominating bank, or a newly started Internet company. EMC has something to offer everyone. What makes EMC even more attractive is its unmatchable customer service. Customers are always kept in close and frequent contact whether it be for unforeseen problems, or to validate new features. Customers have found that EMC offers the best of both worlds, and that no other company so far can be substituted for it. We need high capacity, fast performance, a scalable platform, and total data protections. With EMC, we found a complete solution from one provider. Says the General Manager of information technology, at Komercni Banka. This clearly shows the EMC has eliminated its substitutes by offering something that no one else can match.
Rivals in the industry:
Rivals in any given industry are a part of competition that businesses have to deal with. For the past several years EMC has not had to deal with many competitor since they offer services and customer support that surpasses any other company that has been looking to get into the the information storage industry. IBM, and Sun Microsystems are two companies that have recently been competing with EMC. These are both large established companies that deal in many different aspects of the technology industry. Both IBM and Sun Microsystems have begun to compete with EMC s self started indusrty. The reason for this is because they both have large R&D departments with large budgets that allow development of product comparable to EMC. However since EMC is so focused in their niche market they have a mixture between service and product quality that hasn t been matched by anyone. IBM Sun and the other competitor are not focused just on storage technology but they also have many other interest. This makes companies weary of handing over valuable information to a business that could be in direct competition with them. This gives EMC a competitive advantage over any other company since they are well known for tight security. Another advantage EMC has over its competitors is that they are now recognized as the standard: in computer information back up and storage area.
Organizations around the world know they can safely and confidently put all their eggs in EMC s basket. One Of EMC s slogans is that its good to put all of your eggs (information) in one basket as long as there is someone who s job it is to watch your baske t all the time. No other company has been able to make that claim yet, and until one does EMC will continue to lead the way through Information storage.
Power of Buyers:
Buyers have an enormous effect on how your company does its business. They can demand what ever they need, if you cant supply it they will look elsewhere to find it. Buyers want high quality low cost and unlimited services. If buyers gain too much control they can have negative effects on the companies profits. When substitutes are high buyers can easily drive down prices and demand better service, what ever company fulfills this need will end up prevailing in the long run. EMC has turned this process into their advantage. They have said to the customers tell us hat you want and we will find a way to do it at a low cost, with unbeatable service. Some of these customers put EMC up to a challenge of solving their IT problems.
Lucent Technologies challenged EMC to make an information system that would support their need in marketing, customer service manufacturing and global logistics. Lucent wanted all of these variable to be tied into each other so that they could gain a value on the information that they had available. The solution was that EMC did come up with a standardized way for Lucent to accomplish all of its need at a price that fits the companies budget. Another company that put EMC up to a challenge was Gillette. They wanted a quick and efficient way to bring new products to market and to stream line their business process. Gillette is one of the leading innovators in several different markets, shaving products are their main focus. The faster new innovations are brought to market the quicker the company can get real feedback from customers to make proper adjustment. This all leads to a better end product that is more profitable and higher quality than if it had taken years to develop. Once again EMC meet all the requirements that Gillette had asked for they used a standardized global network that ensured high quality and availability tied in with a software that guarantees availability scalability, and unparalleled management. Chief IT Officer says that EMC is the key to our overall IT strategy which is to be a better business enabler. One more customer that challenged EMC is Transco, which is in the oil and gas distribution business. They need to supply both globally and locally to many different distributor of different size. They need a solution that created a seamless network for every type of business they dealt with. EMC developed the proper software and storage capacity that made this seamless system work. This lead to Transco decreasing its risk in new projects, and enabling them to rapidly turn information into knowledge.
These examples have shown that even though buyers can have a tremendous effect on businesses, it can also be used to their advantage. EMC is able to offer their services from companies as large as America Online to small start up Internet companies with very little capital. Because of positive traits EMC has become a word that is synonymous with excellent service.
Power of Suppliers:
Suppliers can have a large effect on companies in an industry especially if there are limited amounts of suppliers. They can squeeze out profitability by raising prices to increase their own profits or even lowering the quality of their goods. Suppliers become powerful only if the buyer depends on the suppliers product as an important part of their final product.
Another way suppliers gain the upper hand is if there is few companies that supply the goods needed by an industry. Powers of suppliers in EMC s industry is low, this is because the hardware used comes mostly from technology already available. This means that it is easy for EMC to look for a supplier with the best prices that will offer the best services to them. The companies that supply EMC are major PC component builders. Teradyne is one of EMC s suppliers and what they have done is set up a small internal office. EMC has a direct watch over how their products are being manufactured
This allows them to make quick and efficient changes in production which leads to quicker product development and lead times to market. This is how EMC is set up with the majority of its suppliers. Because of these reason EMC has a lot of control over their manufactures, and the suppliers know that if they don t provide them with a competitive price that they are easily substitutable to many other companies eager to have EMC as a buyer.