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Computer Vision Japan

Autor:   •  March 8, 2011  •  Essay  •  2,868 Words (12 Pages)  •  1,529 Views

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Computervision Japan - A

Brief -

In 1982, Computervision (CV) was the worldwide leader in CAD/CAM turnkey systems. These systems were used for increasing productivity and product quality. The company had its headquarters in USA and Japan was by far the largest market for CV. Although its exclusive distributor in Japan – Tokyo Electron Limited (TEL) believed it was doing a good job of marketing the CV product line, there were clear signs that competitors (especially IBM and Fujitsu) were gaining market share at CVÂ's expense. Also, it was observed that market penetration of CV products in Japan was substantially below that in USA and Europe. Therefore, it was believed that if immediate steps were not taken to improve the position, CV could wind up as a minor player in Japanese market. The Vice President was preparing a detailed plan on Japan for recommendations to the board of directors. He was considering the unique market characteristics of Japanese industry, current situation and a market forecast of the product line.

1. What is your best estimate of the 1983 Japanese CAD/CAM Market? Are you confident of your estimate? Is the estimate important?

According to the Dataquest study, the total installed base of CAD/CAM systems was 650 in Japan in 1983 of which 130 were CV systems, i.e. a market share of 20%. Since CV actually had 198 systems installed in Japan in end 1982, the study seems to have greatly understated both the current size and growth of the Japanese CAD/CAM market. Also IBM-Japan, Fujitsu and Seiko had made dramatic strides, indicating that CV's market shares had slipped below 20%. IBM-Japan had the largest CAD/CAM revenues in the Japanese market, with Fujitsu being number two in 1982. The Japanese market had also attracted the attention of most of the new CAD/CAM suppliers such as GM, GE, Lockheed making it a more competitive playing field.

TEL projection that CV has a 50% market share in the Japanese turnkey market that they estimated to be worth $ 60Mn is questionable. Alias contended that the market for CAD/CAM equipment should be about $ 250Mn, given the assumption that Japan has a population of 116 Mn and an economy as advanced as the US one. Since TEL's 1982 sales of CV systems were only about $30 Mn, it would mean that CV has a 12% share of the Japanese market. But his prior experience with the European market indicated that CV's market penetration was highly correlated to the amount of revenue produced per salesperson. TEL had 30 sales reps for CV, with the average revenue per sales rep at about 1$ Mn,, further evidence that CVJ's market share was low. Also 60% of the customers in the IBM list of CAD/CAM customers were not even contacted by CV indicating that adequate market coverage had not been done by TEL.

Alias estimate of a 9%

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