FREE ESSAY ON TOSHIBA

TOSHIBA

Paula Dean
April 27, 2000
Strategic Management
Case Study
Toshiba: The Future is Theirs
In 1875 Hisashige Tanaka established Tanaka Seizo-sho, Japan's first manufacturer of
telegraphic equipment. The company thrived for over 60 years as an independent entity. In
1890, Hakunetsu-sha & Co., Ltd, was founded. It was Japan's first manufacturing facility
of electric incandescent lamps. Then in 1939, the two companies merged to become Tokyo
Shibaura Denki. They were now an electric equipment manufacturer. The company's
reputation was established rapidly and they soon became known simply as Toshiba. They
made this official with the name change to Toshiba in 1978. 
Throughout the company's long life there have been many major inventions that have
guaranteed them a place in history. Among these are the following world's firsts:
1. 1967—first automatic zip code reader
2. 1970—first color video phone
3. 1986—first laptop personal computers
4. 1995—developed high-density optical disc, DVD
They have remained successful for many years because of their ability to stay on top of
the world of technology. This is no small feat. Numerous companies have been lost because
of a rapidly changing technology market that most were unable to keep up with the pace. 
With a resume of inventions spanning more than 120 years, a solid financial history and
their status of being a multinational corporation, where does Toshiba go from here? Can
they continue to keep up the pace of the past with the technology market changing more
each and every day? What can they do to maintain their current level of success without
compromising their values and commitment to the global society? To sum up all these
questions: What's next for Toshiba?
Before looking at what the next step should be for Toshiba, it is necessary to examine
what the driving forces behind the operation and all its decisions are. For them, The
Basic Commitment is this force. In 1990 this Commitment was formulated as a "statement of
management philosophy." Every management decision made is done so by the guidance set
forth in the Basic Commitment, which follows:
We, the Toshiba Group companies, based on our total commitment to people and to the
future, are determined to help create a higher quality of life for all people, and to do
our part to help ensure that progress continues within the world community
Commitment to People
We endeavor to serve the needs of all people, especially our customers, shareholders, and
employees, by implementing forward-looking corporate strategies while carrying out
responsible and responsive business activities. As good corporate citizens, we actively
contribute to further the goals of society.
Commitment to the Future
By continually developing innovative technologies center on the fields of electronics and
energy, we strive to create products and services that enhance human life, and which lead
to a thriving, healthy society. We constantly seek new approaches that help realize the
goals of the world community, including ways to improve the global environment.
When evaluating a mission statement, there are nine essential components that should be
present to prove its effectiveness. Toshiba's Basic Commitment includes all nine and then
some; therefore, it is appropriate to say that Toshiba has a clear idea of who they are
and what they're doing. 
Another key factor in the business world today, is to know what your actual market is.
Toshiba is active in diverse business fields, each with its own unique characteristics
and markets. With this in mind, the markets referred to from this point on will be their
two largest and most profitable: Energy and Electronics. For most large companies,
domestic markets, while key to their establishment, are only a small piece of the
picture. Globalization is the current trend and with technology the way it is, it is sure
to be the way of the future. While many companies are just now beginning to expand into
the global marketplace, Toshiba has already established itself worldwide.
Toshiba has subsidiaries and joint ventures throughout the world. They have a strong
presence in Europe, Asia and the Americas. For instance, in the United States alone,
Toshiba America employs thousands of people and has eight separate divisions. When you
consider that this is only one of the many countries that they are present in, this
demonstrates their strong ability to compete and survive in the global marketplace. 
When you consider the rapidly changing market in which Toshiba participates, establishing
itself as a multinational player is of the utmost importance. If they had little presence
in the global marketplace, their innovations would take longer to reach the consumers and
the chance of someone else developing a similar product would be greater. By being
established in various countries throughout the world, they are able to market their new
products immediately and be the first. This is another key point. While others may follow
suit and come up with substitute or look-alike products, people know that Toshiba was the
original. The fact that they have a good quality reputation increases their chances of
being the brand that people are willing to try with regard to a new product.
Now that we know the history, mission and markets for Toshiba, what about the company
structure itself? In April of 1999, Toshiba underwent a huge restructuring transforming
from a traditional hierarchical/functional structure to that of a divisional structure.
They actually have used a combination of various divisional structures throughout the
entire company. In Japan, the divisional structure is by product with a separate
structure for corporate headquarters. 
In their overseas markets, they are structured first by geographic area and then by
product line. This has proven to be very effective for them in many ways. Now the
individual divisions have autonomy which allows for maximization of communication and the
ability to respond even faster to the changes in their respective markets. For Toshiba as
a whole, this has allowed them to identify exactly which products/divisions are
performing the best with regard to their profit margins and overall growth. By
identifying these problem areas, Toshiba has been able to develop a Medium-term Business
Plan for FY 2000 to 2002.
This new plan involves "pulling back from slow-growth businesses and focus the
electronics giant on faster-growing areas, including semiconductors, computer systems and
Internet related services"(Guth, A12). While there are some repercussions to the plan
such as the announcement of the 6% work force reduction in Japan, the overall benefit to
the company will justify this downsizing. Toshiba is planning on spending more than $3.3
billion on this plan per year. While this amount seems rather large, when one takes into
consideration the possible rewards for the company, it is merely a necessary expense. The
continued survival of Toshiba is hinged upon its ability to compete in the fast-paced
technology market which means concentrating more on these markets than those with little
change from day to day, such as their domestic appliance lines. These areas, while well
established and profitable, do not require as much R&D as do the product lines of the
digital and technological worlds.
Upon evaluating Toshiba through a SWOT analysis, it is easy to understand why the
125-year-old company is still a major force in the business world. 
Strengths
1. Reputation
2. Innovative
3. Global market-share
4. Ability to keep pace with fast-changing technology market
Weaknesses
1. Assets tied up in slow growth areas
2. Technology industry is so fast paced
Opportunities
1. Increase percentage of global market share
2. Technology becoming more commonplace in the home—more customers
3. Internet market
Threats
1. Increased competition in technology industry
2. Fast-paced changes in technology
3. Slower growth areas utilizing valuable resources
Toshiba is a strong company and finding many weaknesses proved to be a very difficult
task. They know what needs to be done and they do it. 
With all of the preceding information in mind, I have formulated some
ideas/recommendations that I feel would prove beneficial to the company. The first of
these is to continue with their new business plan. By freeing up assets that can be used
to increase sales in growing market places, the results could be astronomical profits for
them. The second is to look for more joint ventures that can increase their market
position in current markets. By joining with other similar companies, they are reducing
their competition while improving their own profits. My final recommendation is one that
involves a subject that was not previously covered in this paper, but rather one that is
from my own perception/experience. This would be to increase their marketing in the
United States. The amount of commercials that I have either seen or heard for Toshiba
since the inception of this product is zero. While a good reputation is a solid base, in
a country with as many choices between consumer products as the U S has, advertising is a
necessity for success.
In conclusion, Toshiba has been a major force in the technology industry for many years.
The future will be no different. They are a well-established, quality oriented company
that will not stop until they are NUMBER 1 in all that they do. Toshiba will be here
through our lifetime and that of our grandchildren if they continue to operate the way
they do today. Their encapsulated management philosophy is the best way to describe
Toshiba:
Committed to People, Committed to the Future. Toshiba.
References
Guth, Robert A. "Toshiba Plans Strategic Shift to Fast Growth" The Wall Street Journal. 
February 17, 2000. Pp. A12 and A16.
www.toshiba.com
Nishiroga, Haitzo. E-mail correspondence