Case study- Toshiba

Seeking new markets by multinational companies is a strategy that many companies employ in their quest to beat local market dormancy created by the flooded market with that company’s goods. Flooding of local market delimits the company from expansion hence no capital growth something which is not sustainable in business. Lack of an exit channel for a company’s goods will lengthen the sales time and affect the production of subsequent the same good which in turn would affect the company’s financial predictions. Seeking new markets for an industrial good is not a walk in the park since there are myriads of bottlenecks associated with the move. These challenges often pose a significant threat to a company’s growth strategies as so far as expansion is concerned. So what then constitutes market globalization? According to Hosmer (n.d), market globalization is a strategic approach that companies employ to sell and promote their goods in new markets within and without their borders. Hosmer (n.d) further asserts that market globalization ensures open and free trading without trading limits. Foreign companies apply various strategies of entering new markets in order to expand their businesses and overcome challenges of competition in the local market. Market entry strategy refers to the approaches that these companies seeking to expand to foreign markets apply in achieving their goals (Tanner, 2018).

Toshiba Corporation is one of Japanese oldest companies in their history which has evolved over time spanning different technological inventions in a bid to make the world a better place, not just for Japan but for the world at large. Minato (2018) identifies that Toshiba is one of the largest companies in Japan whose central business line has been the production of electricity and electric products which have impacted both the local and international markets worldwide in one way or another. Toshiba’s background dates back to the year 1873 when the then ministry of engineering which was tasked to modernize Japan through inventions, authorized an inventor Hisashige Tanaka to come up with a telegraph. According to Toshiba Corporation (2018), Tanaka built an engineering factory in 1875 in Tokyo and named it Tanaka Seizo-sho, later known as Tanaka Engineering Works. A series of inventions followed thereafter and spring of inventors sprouted from the initial dream of developing a telegraphic equipment as was commissioned by the ministry of engineering.

In 1939, Toshiba was incorporated but formerly known as Tokyo Shibaru Electronic company after an amalgamation of Shibaru Engineering Works Limited and Tokyo Electronic Company Limited. The name Toshiba was adopted in 1978 (Britannica.com, n.d). Toshiba Incorporation’s business line has seen tremendous boost and expansion over the years. The business line in international markets consists of the famous world leading Toshiba notebook computers, LCDs and semiconductors. Toshiba’s entry into Indian market dates back to fifty years of service in this market. During an exclusive interview with Managing Director of Toshiba Private Limited, India company, Okada (2018) asserts that Toshiba has been in operation in India for a long time figuring that he entered the Toshiba subsidiary in India way back in 1983. Currently, the company employs a whopping more than ten thousand (10000) employees in different role specialization.

Toshiba’s entry to India

Toshiba India deals in various products with a sleek design customized to fit the needs of the marketplace. Since its inception in India, Toshiba has undertaken massive projects and ensured deliverables were achieved at the specified project timelines. Take for instance in the late eighties a time which was marred with political instability, intolerance, scarcity of infrastructure and inadequacy in funding, Toshiba managed to oversee a thermal project (Anpara B) to completion and delivered the required deliverables in time (Okada, 2018). To date, Anpara B thermal plant is still operational even after being instituted in 1994.

Toshiba’s influence in the Indian market is largely attributed to a number of foreign market entry strategies applied by multinational companies of foreign origin. Toshiba among other Japanese multinational companies is faced with the challenge of demographic and economic hurdles which force such companies to seek market elsewhere to maintain their marketing strategies, increase production, overcome ever-increasing competition and to ever ensure growth. Toshiba has employed different market entry strategies into foreign markets, for example, India (Tom O’Sullivan, Shimbun, and Kusaka, 2017).

Toshiba has had a number of acquisitions in the recent past in various parts of the world. India’s prime market has made it easy for the entry of Toshiba. Toshiba has acquired many companies in India providing different services and products and brands it under its name. most recently, Toshiba acquired the largest stake in an Indian water company UEM India. According to Business Standard (2015), Toshiba has diversified its business entering different business lines far from what it is known to do. In the acquisition of UEM, a water service company in India, Toshiba has invested a further 54% from the initial 26% which it had, making it the biggest owner of this company. Business Standard (2016) notes that UEM upon acquisition by Toshiba has improved its operations by winning more tenders with companies associated with Toshiba.

Toshiba is also known to have acquired under percentile ownership of United Technologies South Asia Pacific (PTE) for the provision of air conditioning services. The acquisition will see Toshiba have a greater stake in the business by having a majority venture of 51%. Business Line (2018) notes that the new joint venture will see United Terminologies South Asia Pacific renamed Toshiba Carrier Air Conditioning India.

Vijai Electricals also became a casualty of Toshiba’s acquisition in an attempt to diversify its portfolio. Pilla (2013) notes that Toshiba has acquired the transmission and distribution line of business which is integrated into its own business line. Pilla (2013) further notes that Toshiba positioned the new acquisition as their main core producer and distributor of electricity. Toshiba acquired this company because of the concern the company had in entering the energy transmission and distribution business. Vijai Electricals offered a better service using new technologies in the transmission and distribution process which Toshiba though to take advantage of (TelecomEngine, 2014).  

Toshiba is said to be keen on direct investment injecting its financial power in multimillion-dollar projects in India. The Economic Times (2016) identifies that Toshiba is investing heavily in the Indian power system through its project dubbed Toshiba JSW Power Systems Limited (TJPS). The project aims at the thermal power which is eco-friendly and efficient using coal. This move by Toshiba has enabled the company to have varied avenues of entry into foreign markets, for instance, India in this case.

Acquisition

Toshiba used different strategies to enter the Indian market. Direct exports of finished product and services from Toshiba in Japan found their ways into the Indian market through exportation in the bid to expand its market capture. Toshiba computer notebooks, LCD televisions and semiconductors are some of the most exported finished products from Toshiba Japan. India’s vibrant economy set a base for increased demand for Toshiba products hence opening up the trade avenues. The stringent measures that bar international trade between India and Toshiba were loosened in order to enable Toshiba to operate efficiently through the provision of services in the power industries, transmission and distribution of electricity in exchange of free trade approach a move that saw Toshiba products flood the Indian market.

Toshiba Corporation is also known to be in the forefront in merging with other local and international organizations for diversification of its business line and expansion of the business, a move which has seen the company take center stage in the diversified line of operations. In 2016, Toshiba entered a merger with India’s Maruti Suzuki motors manufacturers alongside Denso. The move was in a bid for Toshiba to create a new line of products specifically the lithium-ion battery which is said to have a major contribution to the powering of the electric train in India. In this joint venture initiative, Toshiba receives the second highest stake of 40% after Suzuki’s 50% and Denso 10% (Thakkar, 2017).

Toshiba’s exploration of merging businesses also extended to its own private subsidiary Toshiba India Private Limited where it merged various outlets for electronics such as LCD televisions and PC distribution to operate under one subsidiary. This move according to Business Line (2011) was a strategic move to unify the business subsidiaries in order to take advantage of their digitized platform. This move was also a means of localizing production of electronics and to bridge the importation gap and subsequently cut any links of importing televisions and PCs to Indian market but rather to manufacture and target the manufacturing to the consumers’ taste and preferences.  The merging approach implemented on various Toshiba importing outlets in India also targeted development of new business lines under one roof and to improve the experience of clients while interacting with Toshiba products. The move saw Toshiba come up with an idea to improve the 3D experience for the good of the consumers of such products who feel restricted by the 3D glasses.

Toshiba has had tremendous achievement in its entry into the Indian market. Okada (2018) notes that Toshiba’s early entry into the Indian market as foreign direct investors in which the company built Anpara B thermal plant the period between the late 80s and early 90s. This technology was built in designs that have seen the project span over long periods of time in operation without fail. The Anpara B thermal plant is still operational and has not failed a single day. This is an achievement for the multinational company in India.

Toshiba was awarded by MIPI in 2017 Corporate awards. According to Toshiba.com (2017), the auspicious MIPI awards recognized the achievements and contribution of Toshiba company and its subsidiaries. Toshiba became the first Japanese company to ever win the award to its sleek design of hardware and software for mobile interfaces. This award also came in handy with Toshiba’s good record on quality leadership.

Foreign direct investments

According to Inayama (2018), Toshiba’s Chennai plant became the first foreign Toshiba’s power manufacturing plant outside Japan to ever been commissioned. The Toshiba owned plant based in India forms the first of its kind and the only plant outside Japan. This is a world breaking record plant which hosts the world largest turbine balancing tunnel featured by 22 meters in length and 10.6 meters in diameter.  This is a great achievement for the Toshiba company operating in India. Inayama (2018) also notes that Toshiba has delivered in various instances in its power subsidiary, 1000 MW of steam power in the Anpara B thermal plant among other notable achievements in the power sector.

Toshiba’s central focus is to design products which are consumer oriented. To achieve this, therefore, Toshiba applies a four-step strategy in its research and development strategy; the social infrastructure, energy, electronic devices, and digital solutions. In social infrastructure, Toshiba considers the supply of reliable, yet efficient technologies and service provision to its consumers in all social categories such as transportation, building and construction industries in a bid to promote safety and security to all.

Toshiba gears towards the provision of efficient energy conventionally and ensures stability in the supply of this energy without fail. Also in line with the World Health Organization’s requirement on the reduction of carbon emission, Toshiba focuses on producing low carbon emitting energy which is safe both for the users and the environment at large. Toshiba’s electronic devices come in user-friendly designs focusing on meeting the consumer demand without strain. Toshiba is concerned about the use of new cutting-edge technologies in their bid make life easy through their technical inventions. The world is going digital; Toshiba is not left out in their digital solutions to real problems that face the consumers. The company seeks to solve life issues using digital solutions in line with the growing techno-how (Toshiba, 2018).

Toshiba is a company that is not directly affected by the political activities in its field of operation due to the nature of the business, however, political upheavals and aftermath such as instability caused by a political process can affect in one way or another the business of the company. Political instability realized in India in the early 90s affected Toshiba’s operations greatly during the Anpara B power plant project (Haseeb, 2017).

A developing economy such as that of India which realizes a 7% annual growth rate poses an outward growth opportunity for Toshiba as new markets are formed hence the need to capture these markets by the provision of products which fit the consumers. Increase in per capita income is good for an economic growth hence the population will have the purchasing power, vice versa is true and not good for business.

This constitutes the culture, beliefs, and norms of a particular society where Toshiba may seek to operate. In India, for example, Toshiba is tasked to design policies and act in accordance to the culture requirements of the market it serves. As a Japanese company, whilst operating in a foreign land, Toshiba has to adjust its policies to suit the local market and act as per those policies.

Continuous competition and market development have pushed multinational companies like Toshiba to quickly adapt to new technological ways of doing business. Toshiba edges competition due to innovativeness which puts cutting-edge technology at their disposal.

Legal factors such as copyrights and pirate related issues stand out in whenever big multinational companies with great competition in the market are mentioned. Toshiba has to whether such by ensuring that it stays upbeat in realizing tactics which are not good for business such as theft of copyright and other malpractices which might be involved.

Environment forms the basic component for every systems’ operation. Consumers are skeptical about their favorite brands being able to satisfy the environmental friendliness. The brands from Toshiba should, therefore, gear towards socially promoting environmental preservation and conservation in every means for example production of clean power free of carbon emissions.

Conclusion

In conclusion, therefore, seeking new markets by companies in a bid to expand their operations and capture new markets elsewhere comes with a lot of challenges that companies face. Multinational companies like Toshiba often seek markets elsewhere to break the product monotony in the local market, something which affects growth and subsequent expansion within the local market. The determinant on how such a company would weather these bottlenecks lie on the implementation of appropriate market entry strategies, most preferably integration of these new market entry strategies. There is no one single strategy that works best for a particular company seeking to explore foreign markets. It is vital that a company employs an integrated approach which will enable the company to overcome any hurdle along its way. Toshiba implemented this integration strategy in its entry into India starting from foreign direct investment, acquisition and even merging with the local companies.

References

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