Abstract

Since its establishment in 1875, Toshiba Corporation has been the mainstay of Japanese
industry.  It was ranked the second largest technology company in Japan in terms of
revenue generation and appeared to be the epitome of good corporate governance. But so
far this company has been an embarrassment to the Japanese with the 2015 accounting
crisis and a long slip. Until Toshiba 's accounting fraud was revealed in 2015, the
company's net sales and profit statistics have been very nice. However, when the
controversy broke out, it turned out that Toshiba 's market was not as favorable as that.
The losses were hidden and offset with massive earnings that were inflated to USD 1.2
billion, an amount that stunned the stock market at the time. There are also comments
that this incident is much more extreme than the Olympus incident of 2007. This
assignment below will address concerns related to the collapse of this company,
including major events in the world and Japan in the period 2007-2013 that have a
negative effect on demand for Toshiba goods and services. Problems the corporation
faced during this period, culture of “loyalty and obedience” in this failure, and its
resolution.
 MAIN CONTENT

I. some of the major events occurring in Japan and worldwide during the period
2007 – 2013 that negatively impacted the demand for Toshiba’s products and
services.

To begin with, there are some of the major events occurring in Japan and
worldwide during the period 2007 – 2013 that negatively impacted the demand for
Toshiba’s products and services. The first event we have to say that is the 2008 global
financial crisis, also called subprime mortage crisis was the worst economic disaster since
the Great Depression of 1929. The global financial crisis in 2008 and 2009 hit Japan hard
as it did with all major industrialized countries. Tokyo stock market crashed as did major
stock markets all over the world. Many saw similarities between the U.S. crisis and the
breakdown of the Japanese economy after the collapse of bubble market. GDP declined
12.1 percent in the October to December quarter in 2008, the biggest contraction in Japan
since 1974. The Japanese economy shrunk by 5.4 percent in 2009 and the unemployment
rate rose to a high of 5.7 percent in August 2009. The government and the Bank of Japan
hold $74.5 billion in debt issued by Fannie Mae and Freddie Mac, two of the largest
housing loan providers in the United States. Claims by Japanese banks and security firms
against Lehman Brothers totaled in the billions of dollars in September 2008. In
February 2009, the IMF said that Japan was in "deep recession"

Alternative energy sources have arisen as another event to Japan. Toshiba

previously concentrated on the nuclear power plant industry with the goal of keeping
ahead of the profitable future sector trend. The advent of renewable energy sources such
as wind and solar, however, has suddenly redirected market demand. While nuclear
power is high-cost, complex manufacturing processes and a large number of risks
theoretically are complex it is unlikely to persuade the most market demand, given the
advantages of alternative energies such as environmental protection, availability and
renewable energy.
 On the afternoon of March 11, 2011, all of Japan suffered yet another horrific
setback. A magnitude 9.1 earthquake northeast of Tokyo set off a tsunami with waves up
to 128 feet striking the Japanese coast. Nearly 20,000 people lost their lives, and direct
material damage was estimated at ¥25 trillion, approximately four times the damage
caused by Hurricane Sandy. The damage to infrastructure was so severe that all 54 of the
country's nuclear reactors were taken offline. Following the tsunami, China temporarily
froze nuclear plant approvals and revised downward its projection of nuclear energy
capacity by 2020. This catastrophe wiped out many cities, caused nuclear leaks and left
thousands of people in a desperate situation.  This disaster caused the nuclear industry 's
confidence to fall, leading to a downturn in market demand, and Toshiba 's strategic
strategy collapsed again.

II. problems Toshiba had during the period 2007 – 2013.

From 2007 to 2013, Toshiba had to face with many problems. Due to the above-
mentioned incidents, the Company must resolve a substantial decline in market demand
for its goods. The global financial crisis of 2008 made raising capital more difficult than
ever before. Construction of nuclear power plants has been very costly. In 2011, a 9.1
magnitude earthquake in the north-east of Tokyo set off a tsunami with waves of up to
128 feet across the Japanese coast. Infrastructure damage was so severe that all 54 of the
country's nuclear reactors were shut down. By mid-2018, only nine of the 54 reactors had
returned online. Toshiba has suffered a loss of at least $ 6 billion in the nuclear power
plant industry. In 2010 Toshiba began transferring TV production to outside contractors.
Accepting to sell part of the business presented problems.

Another problem come from the pride and conservatism of the Japanese. In the TV
sector Korea and China have continuously overwhelmed them by establishing a favorable
price-to-specific growth that forces customers to reject Japanese television. Toshiba are
very good at developing something to the top that no other countries can keep up with but
they still keep the same development path even when it becomes out of date. As a
consequence, consumers' needs changed and they quickly adopted new and modern
devices at the lower prices.

The biggest problem is substantial fraud case that shocked the country. In the
fiscal year ending March 2015, the company reported sales more than $63 billion. The
accounting misconduct started under the leadership of CEO Atsutoshi Nishida in 2008.
The investigators revealed that the CEO did not directly instruct anyone to cook the
books, but they placed immense pressure on subordinates and waited for the corporate
culture to turn the results they wanted, they say. The panel also identified weak corporate
governance and poor functioning system of internal controls at every level of the Toshiba
conglomerate.

III. What role did "loyalty and obedience" in Toshiba fraud play in the Japanese
culture?

In my opinion, the Japanese culture of “loyalty and obedience” played an

important role in the scandal when considering the Toshiba scandal. Japan has a
decentralized corporate culture that builds on a long history of loyalty. They do all they
can to prevent the company from getting embarrassed. The culture in Toshiba, like many
other Japanese companies, is that it is not viewed well if employees question their
superiors. It is a culture of obedience passed on and difficult to get rid of over
generations. When the top management presented the profit targets, the division
president, line managers, and the employees continued to carry out inappropriate
accounting practices so as to meet the targets in line with wishes of the executives. The
scandal did not lead directly to the downfall of Toshiba but it revealed the deeper issues
faced by many Japanese technology companies as well. The Toshiba scandal is an
indication of the need for changes in the Japanese companies. Japan needs a massive
cultural change. A change in the corporate governance landscape can help in promoting a
culture in the Japan companies that misconduct is supposed to be discouraged and
stopped as soon as possible. it is important that Japanese companies need to make some
changes in the corporate structure so as to avoid experiencing the same problem as
Toshiba.

IV. 2 most important solutions for Toshiba

A method for solving the problem at Toshiba is through a reform of the corporate culture.
Toshiba needs to create a culture that accepts as standard what is legal and also what is
right to do. A change in corporate governance may help to promote a culture in Japanese
businesses that should discourage misconduct. A different perspective and great
transparency in the organization should be considered by Toshiba to employ more non-
Japanese staff and the diversity of g. A diverse work environment and the ability of
employees to offer their opinions will help to strengthen corporate governance policies
when Toshiba embraces diversity. Managers should concentrate on creating a healthy
culture in the workplace and take serious measures to benefit those who seek to benefit
from it.

The other is that Toshiba has to fulfill business demands. Investment errors in the nuclear
power plant industry, which are not strengths, have caused Toshiba to fall because they
have failed to predict future demand. Investment choices need to be wiser and more
appropriate. In addition, the conservative, refusing to innovate products to suit the goods
and services of consumers led to being out of date and losing a lot while Korea and China
are just the overwhelming juniors. It's not enough to be a pioneer, Toshiba must always
know how to improve its products, catch up with trends and invest in order to save the
crisis in exchange for more demand from customers. In particular, to reverse the tide in
the consumer electronics manufacturing industry, which is so competitive, Toshiba was
left too far behind its competitors. Rather, focus on accelerating restructuring plans and
moving towards electronic energy and high-end electronic components.

Conclusion
Toshiba 's fall is a typical business case. This can be seen as a lesson for other companies.
From a small fraud, Toshiba fell back and deeper into the mistake. When everything was
exposed, they had no way to retreat and struggled in a spiral of debt, insurrection and
punishment. In the end, when everything is missed, the solution is just an attempt to sell
itself - leaving regret for once polished brands
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