Strategic Analysis Of Emc Corp. Essay, Research Paper
I say, Don T put all your eggs in one basket is all incorrect. I tell you, Put all your eggs in one basket, and so watch that basket. ( Andrew Carnegie, 1885 ) -Quote in EMC Annual Report
EMC: Mission Statement- To do information accessible across the computer science endeavor, irrespective of the beginning or the mark.
EMC Corporation, based in Hopkinton, Massachusetts. with 11,200 employees worldwide, is the universe s taking provider of intelligent endeavor storage and retrieval engineering. EMC is a Fortune 500 company and was ranked 9th on Business Week s 1998 Info Tech 100 list of the universe s best-performing information engineering companies. In 1998, EMC had an one-year gross of $ 3.9 billion. EMC designs systems for unfastened system, mainframe, and midrange environments. EMC is the lone company in the universe wholly focused on quickly presenting intelligent endeavor storage and retrieval solutions. This enables companies and organisations to leverage their turning volumes of information into profitableness, growing and competitory advantage. EMC Enterprise Storage systems, package merchandises, and services are the taking information entree and storage solutions for every major calculating platform in today s concern endeavor.
EMC was founded in 1979 by Richard Egan and Robert Marino ( the E and M in EMC ) as a provider of add-on memory boards. EMC s rapid rise in the worldwide informations storage market began its major rush in 1989, when the company revised its scheme to aline itself with concerns turning trust on progressively huge and complex sums of electronic informations. In 1990 with the debut of EMC s Symmetrix merchandise line, EMC became the first company to supply intelligent storage systems based on arrays of little, trade good difficult disc thrusts for the mainframe market. Since the in debut of Symmetrix engineering, more than 30,000 of these systems have been sold around the Earth and EMC s one-year grosss have grown from $ 190 million in 1990 to $ 3.97 billion in 1998. With the debut of Symmetrix Remote Data Facility in 1994, EMC became the universe s taking storage-based solution for concern continuity and catastrophe recovery. EMC s portfolio of storage package includes EMC TimeFinder, EMC Data Manager, EMC PowerPath and Symmetrix Manager. With its $ 445 million in package gross in 1998, this makes EMC one of the universe s largest and fastest-growing package companies.
The major clients of EMC include the universe s largest Bankss and fiscal services houses, telecommunications suppliers, air hoses, retail merchants and makers, every bit good as authoritiess, universities, and scientific establishments. These clients rely on EMC s advanced storage solutions for such applications as on-line reserve systems, dealing processing, client charge, twelvemonth 2000 conformity, the Internet and corporate intranets, concern continuance/disaster recovery, information excavation and informations warehousing. EMC has besides formed confederations with the universe s taking package, application and database companies, such as Microsoft, SAP, Oracle, Baan, and PeopleSoft.
EMC is a planetary organisation, and is represented by more than 100 offices worldwide. The company manufactures its merchandises in Massachusetts and Ireland. EMC has R & A ; D installations in Massachusetts, Colorado, Israel, and France. They besides have Customer Support Centers in Massachusetts, Ireland, Japan, and Australia. EMC holds the most rigorous quality direction enfranchisement from the International Organization for Standardization ( ISO 9001 ) and its fabrication operations hold MRP II Class A enfranchisement. The company trades on the New York Stock Exchange under the symbol EMC and is a constituent of the S & A ; P 500 Index.
EMC: Top Level Management
Richard J. Egan- Founder and Chairman Egan is a laminitis of EMC Corporation.. He has served as Director since the companies origin in 1979. In 1988, Egan brought the company populace and was elected Chairman of the Board. He held the place of President and CEO until January 1992.
Michael C. Ruettgers- President and CEO Ruettgers has held the place 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 K bit memory boards are developed for Prime Computers.
1982- EMC corporate central office moves to Natick, Massachusetts.
-Annual gross revenues surpass the $ 3 million grade.
1984- Five old ages after the company s initiation, one-year gross revenues reach $ 18.8 million, about trebling
1985- EMC is first to commercially transport denser memory ascents utilizing 1-megabit Random
Access Memory ( RAM ) engineering.
1986- EMC goes public in April ; makes initial public offering on the NASDAQ stock exchange.
-Total grosss double over 1985 to $ 66.6 million ; net income more than doubles to $ 18.6 million.
1987- Corporate central office relocates to Hopkinton, Massachusetts.
1988- EMC opens its European fabrication installation in Cork, Ireland.
-EMC stock lists for the first clip on the New York Stock Exchange in March.
1989- Second major US corporate installation is opened in Hopkinton, Massachusetts.
-EMC develops Direct Access Storage Device ( DASD ) subsystems with machine-controlled mistake
thresholding for IBM System/38 and AS/400 computing machines.
-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
function as Chairman and CEO
1990- EMC redefines mainframes storage by presenting the Symmetrix 4200 Integrated Cached
Disk Array ( ICDA ) , a 24-gigabyte RAID mainframe storage system that replaces traditional
14 DASD discs with the mainframe industry s first 5.25-inch discs. Performance is farther
enhanced through 4-gigabyte cache and 32-processor accountant cards.
-EMC institutes a Continuous Quality Improvement procedure, ensuing in greatly enhanced merchandise and procedure quality, every bit good as over $ 20 million saved to day of the month ( 1995 ) .
1991- Several sweetenings to the Symmetrix ICDA merchandise line give EMC the ability to vie
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 portion increases from 5 % to 15 % .
1994- EMC introduces the universe s foremost terabyte box and the company surpasses the $ 1 billion
one-year gross grade.
1995- EMC introduces foremost Symmetrix storage systems for unfastened systems and surpasses IBM as
market portion leader in mainframe disc storage capacity.
1996- EMC becomes leader in the unfastened storage market.
1997- EMC extends lead in the endeavor storage and retrieval market.
1998- The EMC Effect is felt across the computer science endeavor.
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 providers, power of purchasers, menace of replacements, and competition & A ; industry construction. These five forces that Porter developed hold become a strong model in assisting strategic troughs find replies as to how, or why determination can hold an impact on their house, and the industry they operate in. When analyzed the corporate strength of these forces show possible net incomes 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 houses must get the better of in order to come in an industry. These barriers can be caused from high initial investing, merchandise distinction, cost disadvantage, entree to distribution channels, or restrictive authorities policies. An illustration of this could be the phone, or overseas telegram companies. There are really few companies that are able to vie within this industry because of the high capital demands to get down off. An tremendous sum of clip and money would hold to be spent on put ining lines throughout the state to provide you clients with the services they want.
EMC is in a state of affairs where it has created several barriers to entry. Capital demands are one of the barriers that EMC has in its favour. In 1979 EMC started its concern in informations storage which it is now the taking company in its industry. It has offices all over the Earth and is the lone company in the universe to be specifically focused on quickly presenting intelligent endeavor storage and retrieval solutions. There are really few companies that can vie with EMC because of its name association and big international operation. New entryway into this industry would hold to put big sums of clip and money into research and development. EMC already has the engineering and is invariably updating with more advanced services.
Another barrier to entry is merchandise distinction. EMC is specialized in endeavor storage, which is much different than conventional storage. While conventional storage has been used to endorse up memory in instance of a catastrophe or, to log companies minutess, 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 endeavor connectivity, information centricity, cascadability, information direction, information sharing, and information protection. It can be clearly seen that this industry is invariably altering, and new merchandises are coming out every twenty-four hours. If you are non the leader in this new engineering so you will non last. EMC has without a uncertainty developed barriers to entry.
Menace of Substitutes:
The menace of replacements is how easy a merchandise can be interchanged with another. For illustration if you are traveling to purchase bottled H2O you determination will finally come down to monetary value. An expensive brassy bottle of H2O can easy be exchanged for a generic shop trade name bottle at a fraction of the cost. However with services it is a different narrative. Lawyers for illustration could easy be substituted if you were looking at the cost. It would be really simple to happen a inexpensive attorney, nevertheless you might stop up losing your instance. To acquire a top of the line service you will hold to pay a small excess. EMC is a top of the line service which besides offers a really low-cost pricing scheme. Its pricing really sensitive with the companies it works with, whether you are a universe ruling bank, or a freshly started Internet company. EMC has something to offer everyone. What makes EMC even more attractive is its matchless client service. Customers are ever kept in close and frequent contact whether it be for unanticipated jobs, or to formalize new characteristics. Customers have found that EMC offers the best of both universes, and that no other company so far can be substituted for it. We need high capacity, fast public presentation, a scalable platform, and entire informations protections. With EMC, we found a complete solution from one supplier. Says the General Manager of information engineering, at Komercni Banka. This clearly shows the EMC has eliminated its replacements by offering something that no 1 else can fit.
Rivals in the industry:
Rivals in any given industry are a portion of competition that concerns have to cover with. For the past several old ages EMC has non had to cover with many rival since they offer services and client support that surpasses any other company that has been looking to acquire into the the information storage industry. IBM, and Sun Microsystems are two companies that have late been viing with EMC. These are both big established companies that deal in many different facets of the engineering industry. Both IBM and Sun Microsystems have begun to vie with EMC s self started indusrty. The ground for this is because they both have big R & A ; D sections with big budgets that allow development of merchandise comparable to EMC. However since EMC is so focussed in their niche market they have a mixture between service and merchandise quality that hasn t been matched by anyone. IBM Sun and the other rival are non focused merely on storage engineering but they besides have many other involvement. This makes companies weary of passing over valuable information to a concern that could be in direct competition with them. This gives EMC a competitory advantage over any other company since they are good known for tight security. Another advantage EMC has over its rivals is that they are now recognized as the criterion: in computing machine information back up and storage country.
Organizations around the universe know they can safely and confidently put all their eggs in EMC s basket. One Of EMC s mottos is that its good to set all of your eggs ( information ) in one basket every bit long as there is person who s occupation it is to watch your baske t all the clip. No other company has been able to do that claim yet, and until one does EMC will go on to take the manner through Information storage.
Power of Buyers:
Buyers have an tremendous consequence on how your company does its concern. They can demand what of all time they need, if you cant provide it they will look elsewhere to happen it. Buyers want high quality low cost and limitless services. If purchasers gain excessively much control they can hold negative effects on the companies net incomes. When replacements are high purchasers can easy drive down monetary values and demand better service, what of all time company fulfills this demand will stop up predominating in the long tally. EMC has turned this procedure into their advantage. They have said to the clients tell us hat you want and we will happen a manner to make it at a low cost, with unbeatable service. Some of these clients put EMC up to a challenge of work outing their Information technology jobs.
Lucent Technologies challenged EMC to do an information system that would back up their demand in selling, client service fabrication and planetary logistics. Lucent wanted all of these variable to be tied into each other so that they could derive a value on the information that they had available. The solution was that EMC did come up with a standardised manner for Lucent to carry through all of its demand at a monetary value that fits the companies budget. Another company that put EMC up to a challenge was Gillette. They wanted a speedy and efficient manner to convey new merchandises to market and to stream line their concern procedure. Gillette is one of the taking pioneers in several different markets, shaving merchandises are their chief focal point. The faster new inventions are brought to market the quicker the company can acquire existent feedback from clients to do proper accommodation. This all leads to a better terminal merchandise that is more profitable and higher quality than if it had taken old ages to develop. Once once more EMC run into all the demands that Gillette had asked for they used a standardised planetary web that ensured high quality and handiness tied in with a package that guarantees handiness scalability, and alone direction. Head IT Officer says that EMC is the key to our overall IT scheme which is to be a better concern enabler. One more client that challenged EMC is Transco, which is in the oil and gas distribution concern. They need to provide both globally and locally to many different distributer of different size. They need a solution that created a seamless web for every type of concern they dealt with. EMC developed the proper package and storage capacity that made this seamless system work. This lead to Transco diminishing its hazard in new undertakings, and enabling them to quickly turn information into cognition.
These illustrations have shown that even though purchasers can hold a enormous consequence on concerns, it can besides be used to their advantage. EMC is able to offer their services from companies every bit big as America Online to little get down up Internet companies with really small capital. Because of positive traits EMC has become a word that is synonymous with first-class service.
Power of Suppliers:
Suppliers can hold a big consequence on companies in an industry particularly if there are limited sums of providers. They can squash out profitableness by raising monetary values to increase their ain net incomes or even take downing the quality of their goods. Suppliers become powerful merely if the purchaser depends on the providers merchandise as an of import portion of their concluding merchandise.
Another manner providers gain the upper manus is if there is few companies that supply the goods needed by an industry. Powers of providers in EMC s industry is low, this is because the hardware used comes largely from engineering already available. This means that it is easy for EMC to look for a provider with the best monetary values that will offer the best services to them. The companies that supply EMC are major Personal computer constituent builders. Teradyne is one of EMC s providers and what they have done is set up a little internal office. EMC has a direct ticker over how their merchandises are being manufactured
This allows them to do speedy and efficient alterations in production which leads to quicker merchandise development and lead times to market. This is how EMC is set up with the bulk of its providers. Because of these ground EMC has a batch of control over their industries, and the providers know that if they don t supply them with a competitory monetary value that they are easy substitutable to many other companies eager to hold EMC as a purchaser.
Value Chain Analysis
EMC is noted for being recognized as the time-to market leader in presenting advanced storage and retrieval engineering and information direction and protection package to companies whose success depends on information. Using Porter s value concatenation EMC can be broken down into specific activities which contribute to a companies success or malfunction. Within the value concatenation analysis specific activities can be recognized as typical competences. For EMC the typical competences include inward logistics and engineering, research & A ; development. These activities create strength relation to identify competition.
The first primary activity is buying supplies and inbound logistics. This is EMC s distinguishable competence for primary activities. EMC is dedicated to supplying the best merchandise possible, but they must be able to make an first-class merchandise at a competitory monetary value. Due to EMC s recent success, other companies have joined the industry to seek and hard currency in. Two major rivals are IBM and Hitachi Data Systems Corp. These are two elephantine companies have highly deep pockets, a large presence among mainframe users, and guaranteed supplies of thrusts from in-house fabrication operations. In order to stay competitory with
these companies EMC has come up with a cost effectual scheme for purchasing supplies.
Alternatively of paying for usage made parts, or constructing them in-house, EMC has found a manner to incorporate regular Personal computer constituents into their systems. Every system that they build contains tonss of commercial DRAM memory french friess and off-the-rack disc thrusts made by Seagate Technology Inc. Along with this scheme, EMC is besides able to do partnerships with providing companies in order to better command the merchandise that they are having.
An illustration of this is at Teradyne, which is a worldwide know constituent manufacturer. EMC really sets up a section in the Teradyne fabrication works which allows EMC and Teradyne to pass on to each other better. EMC can rapidly supply Teradyne with any new information pertaining to the merchandise that they need, and assist implement and new processs. This besides gives EMC more control over the quality of their supplies because they can watch them being produced, and oversee the transit of the merchandises to EMC. This scheme along with utilizing regular Personal computer parts allows EMC to sit the ever bettering Personal computer industry price-performing curve, while adding value via package. This is a distinguishable competence.
It was evident to some of there clients that utilizing these parts would make a poorer merchandise than their rivals. They convinced Visa International in 1995 under the claims that their merchandise could recover monolithic sums of informations without fillet, twenty-four hours in and twenty-four hours out, at velocities nearing 3,000 minutess per minute to seek their new systems. Visa claims that EMC s merchandise has cut by one 3rd the clip it takes to treat $ 3 billion dollars worth of recognition card minutess each dark. EMC s attack to be film editing is an advanced and strategic manner to cut down on the cost of supplies while still vouching the quality.
The 2nd primary activity is the operations of EMC. EMC has major fabricating workss in both Massachusetts and Ireland. In these workss are the ground why EMC is ranked 4th on what Barron s calls a alone ranking of America s best companies for investors. EMC holds the most rigorous quality direction enfranchisement from the International Organization for Standardization. Not merely are they commended for their quality direction, but besides for its fabrication operations, which holds an MRP II Class A enfranchisement.
Traveling down the concatenation, the following primary activity is outward logistics. EMC produces computing machine merchandises for some of the most celebrated establishments in the universe. These clients include the universe s largest Bankss and fiscal service signifiers, telecommunications and internet service suppliers, air hoses, retail merchants, and makers every bit good as authoritiess, universities, and scientific establishments. In order to successfully administer their merchandise, which is critical to these really of import companies and establishments, EMC has set up a big system. This system includes over one hundred gross revenues offices with distribution spouses in over 50 states. The merchandise that they are presenting to their clients can sometimes be really complicated, they therefore offer a client preparation catalog. EMC believes that their merchandise becomes a strategic portion of their clients IT substructure, and hence they need information that will let them to optimise its power and capablenesss instantly.
The following primary activity is Gross saless and selling. Why the roar in an old tech sector? Storage is detonating as companies build huge electronic warehouses to hoard reams of gross revenues, fiscal, and operations informations from every corner of their concerns. The cyberspace is besides fueling demand for more storage. EMC is dedicated to supplying its clients with the highest degrees of merchandise quality backed up by alone worldwide client service. We are committed to presenting enterprise storage solutions that header with today s concern challenges while constructing information schemes for the hereafter. ( Michael C. Ruettgers, President and Chief Executive Officer ) In order to further better their gross revenues and selling every bit good as their outbound logistics, they have besides formed confederations with the universe s taking package, application and database companies, including Microsoft, SAP, Oracle, Baan, and PeopleSoft. Gross from EMC s package in 1998 was $ 445 million, doing EMC one of the universe s largest, and fastest turning companies. Their one-year gross has besides surged from $ 190 million in 1990 to $ 3.97 billion in 1998. EMC is the information storage and direction solution of pick for every major calculating platform in today s concern endeavor.
The concluding primary activity is service. When a company provides a package merchandise to such of import companies and establishments it is highly of import to be able to endorse it up with faultless client service. EMC supports and services its clients by uniting the industries most advanced distant service engineering with the planetary range, hands-on expertness and mundane committedness to extremely skilled service squads. They besides have a built-in-service attack which is designed to observe mistakes before a state of affairs reaches an utmost point and informations inaccessibility occurs by utilizing the latest diagnostic engineering and telecommunications links that continuously monitor and study on the environmental position of each installed system. EMC s client support besides includes client support centres in Massachusetts, Japan, Ireland, and Australia.
The first support activity is human resources. We are a quickly turning, dynamic company where employees at every degree can do a mensurable impact on our concern. This motivates us to make the best occupation possible and creates existent chances to travel in front. ( Kira, Project Manager ) EMC employs over 11,200 people worldwide, including about 4,600 in Massachusetts. Features that they look for include ; unity, sense of urgency, quality, communicating, time-to-market, and focal point. They offer their employees a broad array of benefits including ; wellness programs, pre-tax disbursement histories, disablement programs, life insurance, investing programs, and other plans. EMC is the universe s finest, financially successful, prima border Enterprise Storage company & # 8211 ; with a repute for superior client apprehension, entire quality, and extremely gifted people.
The 2nd support activity includes Technology, Research & A ; Development. This is EMC s distinguishable competence for support activities. This is one of the most of import facets of the company and one of their strongest competences, because EMC has to remain on the cutting border of engineering to maintain their package competitory. They have Research and Development installations in Massachusetts, Colorado, Israel, and France. More than 70 % of their applied scientists focus purely on the development of package. EMC expects to put over $ 1 billion dollars in Research and Development over the following three old ages. Analysts say EMC s engineering gives it a biennial lead over rivals. Most of their challengers are still seting their merchandises into one type of computing machine, but EMC s work every bit with mainframe and Personal computers. That gives them a big border in a market expected to turn from $ 10 billion in 1997 to $ 25 billion in 2002. They have besides come up with a simple solution to the twelvemonth 2000 job. They will merely hold all their clients back up the storage before the millenary. With all this engineering, research, and development, some analysts believe that EMC could fall in Intel, Microsoft, Cisco, and Oracle as the following franchise company in engineering.
The last support activity is general disposal. General Administration is another strong facet of this company. EMC is one of the World s 100 Best Managed Companies.
Lead by their founder/chairman Richard J. Egan and their President/CEO Michael C. Reuttgers, EMC is dedicated to supplying its clients with the highest degrees of merchandise quality backed up by alone worldwide client service.
EMC: Fiscal Analysis
The ability to set information to work to accomplish the most aggressive ends is what EMC refers to as The EMC Effect. The fiscal public presentation of EMC in 1998 is cogent evidence of THE EMC Effect. In 1998 EMC s grosss rose 35 per centum over 1997 to $ 3.97 billion. Their package gross revenues grew 152 per centum to $ 445 million, doing EMC the universe s fastest-growing major package company and lending to the rise in their gross border to 51.5 per centum. EMC s net income increased 47 per centum to $ 793 million. On a diluted footing, net incomes per portion were $ 1.49, a 43 per centum rise from 1997.
EMC s rise to the top didn T go unnoticed. Throughout 1998, investors, analysts, and journalists took note of EMC s lifting gross and net income growing rates, market and engineering leading, and singular client trueness. EMC s stock monetary value rose 210 per centum during 1998, raising their market value by 29 billion, to a twelvemonth terminal market capitalisation of $ 42.8 billion. Their outstanding stock growing landed EMC on top of the New York Stock Exchange, surpassing all other S & A ; P 500 companies in 1998.
This foundation of excellence explains why EMC s client satisfaction is above 98 per centum and why their client keeping rate is above 99 per centum. This besides explains why EMC is now viewed as a engineering franchise company on the same degree as Intel and Microsoft and a builder of the information substructure for the digital economic system.
EMC presently leads the storage system market that they are in. Their competition is really hard to detect because they are a really focussed concern where as their rivals are a batch more diverse. For case, IBM and Sun corporations are both in the storage system concern, but they are besides in many other technological based markets. Therefore it is hard to compare the two. EMC s concern can be better compared to some company s that are in the computing machine peripheral industry. Those rivals are Quantum, Lexmark, Storage Technology, and Imation.
First of all, Quantum is one of their rivals and they are one of the highest volume planetary providers of difficult disc thrusts for personal computing machines, Quantum is besides a taking provider of high capacity difficult thrusts and the world-wide gross leader among all categories of tape thrusts.
Storage Technology is besides a rival and they are the top supplier of web calculating storage. Storage Technology merchandises and services shop, conveyance, and secure more than 100 PBs of the universe s information, runing from mainframe informations to client/server applications to video, sound and still images
Lexmark is considered a rival of EMC, but they are more focussed in the printing system concern. They are a aggressive, planetary developer, maker and provider of publishing solutions and merchandises, including optical maser, inkjet and point matrix pressmans and associated consumable supplies for the office and place markets. They are recognized in the industry for its user-perspective attack, and they are presently traveling sharply to run into the altering demands of today s concern clients and other consumers.
Their concluding rival is Imation Corporation which is a planetary engineering company that creates system, merchandise and service solutions for the handling, storage, transmittal and usage of images and information. In 1998, the company reported grosss of about $ 1.3 billion on go oning operations, and they besides had a market presence in more than 60 states. Approximately 45 per centum of Imation & # 8217 ; s gross revenues are generated outside the United States.
A comparative analysis of 5 of the leaders in the computing machine peripheral industry, EMC, Quantum, Lexmark, Storage Tech. , and Imation, will demo us who has the competitory advantage in the market. Fiscal ratios are an first-class manner to measure a company s fiscal statement. Ratio analysis is of import for three chief groups. Directors are the first group. Directors employ ratios to assist analyse, control, and therefore better their houses operations. The 2nd group is recognition analysts, this group is composed of chiefly bank loan officers or bond evaluation analysts. They analyze ratios to assist determine a company s ability to pay their debts. The last group is stock analysts. This group is interested in a company s efficiency, hazard, and growing chances.
The first set of ratio s we will be analysing are the Liquidity ratios, the current ratio and the speedy ratio. The first ratio we are traveling to look at is the current ratio. The current ratio is calculated by spliting current assets by current liabilities. Calculating this ratio allows you to see a company s ability to run into short-run duties. The current ratio provides the best individual index of the extent to which the claims of short-run creditors are covered by liquid assets and because of this the current ratio is the most normally used step of short-run solvency. EMC is the front smuggler in this class. They have a current ratio of 3.92. Quantum is 2nd with 2.83, Imation is 3rd with a 2.1 current ratio, Lexmark is following with 1.57, and Storage Tech has the worst current ratio of the 5 companies at 1.47. The industry norm is comparatively high at 3.75. A high current ratio is a positive mark for EMC. Creditors like to see a high current ratio. It indicates that they have the ability to pay creditors if they start sing any fiscal troubles. A high current ratio could be negative from the position of a stockholder. A high current ratio could intend that the company has a batch of money tied up in non-productive assets, such as extra hard currency or marketable securities. However, this is non the instance when covering with EMC. Their stockholders couldn T be happier.
The speedy ratio is the following ratio we will be analysing. The speedy ratio is calculated by subtracting stock lists from current assets and so spliting the balance by current liabilities. Inventories normally are the least liquid of a house s current assets, therefore those on which losingss are most likely to happen in the event of settlement. Due to this a step of the house s ability to pay off short-run duties without trusting on the sale of stock lists is of import. EMC is the leader of the 5 companies with a speedy ratio of 3.08. Quantum is 2nd at 2.12, so Imation at 1.15, following is Storage Tech. At 1, and Lexmark is last in this group with a speedy ratio of.87. The industry norm is 2.95. This exemplifies EMC s domination over their top rivals in this country. Having a high quick ratio is really appealing to creditors and investors and is merely another ground why EMC s stock monetary value is so high.
The following ratio we will by analysing is the stock list turnover ratio. The stock list turnover ratio is calculated by spliting gross revenues by stock lists. This ratio allows us to see how many times a twelvemonth the companies stock list is sold out and restocked, or turned over. Quantum is the front smuggler in this class with an stock list turnover ratio of 13.81. This is singular when comparing it against the 5 top rivals. Lexmark is 2nd at 5.81, Storage Tech. is following at 4.53, EMC is 4th at 4.29, and Imation is last with an stock list turnover ratio of 4.17. This means EMC turns their stock list over 4.29 times a twelvemonth. This figure is merely below the industry norm of 5.49. A possible account for EMC s sub-par stock list turnover ratio is the fact that they lease a batch of their stock list alternatively of straight-out selling it. This could hold a negative consequence on their ratio.
Another of import ratio to analyse is a company s Return on Assets. This is calculated by spliting net income available to shareholders by entire assets. EMC is the leader in this class with an ROA of 21.85. Lexmark is 2nd with an ROA of 20.31. The other three companies don t even vie in this analysis. Imation is at 5.07, Storage Tech. is at 0.21, and Quantum is a -1.06. The industry norm is 18.06. EMC s high ROA reflects the company s high-basic gaining power. The high ROA is a positive facet of the company.
The last ratio we are traveling to look at is the return on common equity. This is a really of import facet of a company. This ratio is calculated by spliting net income available to common shareholders by common equity. This ratio is particularly of import to shareholders because this ratio is fundamentally the rate of return on a shareholders investing. Lexmark s public presentation in this country is singular, they have an ROE of 52.98. The following nearest rival is EMC at 29.71 which is a broad border between first and 2nd. Imation is 3rd at 8.94, Storage Tech. is following at.42, and Quantum is fighting at -1.93 in last topographic point. The industry norm is 26.19. Both EMC and Lexmark are highly attractive in this country. Anytime a shareholder is acquiring that sort of return on their investing they are traveling to be highly happy.
A critical facet of a company and a really revealing statistic about a company is the company s stock monetary value. EMC s domination in this country is overpowering. As of Friday December 10th, 1999 EMC s stock monetary value was $ 94.44. Lexmark is 2nd at $ 75.86, Imation is presently at $ 30.81, Quantum at $ 23.19, and Storage Tech. is last at $ 18.19. EMC s high stock monetary value reflects how good the company is making and you could see how successful they are from our ratio analysis. They are industry front smugglers and there are no marks that anything is traveling to alter. Their stock monetary value rose 210 per centum during 1998 and merely continued to lift in 1999. EMC is the leader in the storage systems industry. A great ground for their success is attributed to their go oning production of new merchandises. Almost 80 per centum of EMC s gross in 1998 came from merchandises introduced in 1998.
EMC: Strategic Recommendations
After carry oning our research on EMC it is apparent that they are a extremely profitable company and are far and off the leaders in their industry. However, we keep coming back to the inquiry of whether or non their success will last. We feel that they have the ability to go on to win with some meddling of their current schemes.
A cardinal recommendation we would do to EMC is for them to gripe up their international gross revenues staff. EMC has experienced enormous success here in the United States and as international demand continues to increase EMC has to be able to run into outlooks of foreign investors.
A cardinal ingredient for EMC in their conflict to remain a top the storage systems industry will be their ability to endure a monetary value war. Right now t he demand for EMC unfastened storage merchandises is so strong that the company is able to bear down twice every bit much as their rivals. However, it is believed that monetary values for unfastened storage will get down to fall aggressively as competition heats up. This could overcast EMC s chances in much the same manner that falling mainframe-storage monetary values in the mid-90 s caused EMC s stock to procrastinate. One danger is the agile new rivals at the low terminal of the market. Gross saless of storage systems for Windowss NT waiters from companies such as Compaq Computer Corp. and Data General Corp. , for illustration, should mount 34 % yearly for the following four old ages vs. 9.4 % for the entire storage market. Despite all this EMC appears better positioned than others to endure a monetary value war. Falling monetary values are portion of the computing machine storage industry and the lower monetary values could fuel demand for unfastened storage.