Business Environment - Toshiba - Case Study Example

Business Environment Ahmed Saleh STU33354 Introduction Toshiba is a diversified manufacturer of electronic and electrical products with its product portfolio including communication equipment, power systems, household machines and electronic components (Toshiba Corporation SWOT Analysis, 2013). The company has a strong position within the market of its operations, which enhances its competitive advantage as well as its bargaining power. To ensure that the organization abide by the highest ethical standards as well as making sure that it abides to the law, the company offer educational seminars to employees. Moreover, in ensuring that the company establishes mutual relationship with suppliers founded on trust and fair open-trade practices the company is committed to complying with laws and regulations that uphold human rights and those that protect the environment. Toshiba prioritizes compliance with laws, regulations, social customs and corporate ethics throughout its business activities. The company’s policy on intellectual property rights considers compliance with the law associated with the rights as well as respecting the lawful intellectual property rights from third parties. Moreover as part of the organization’s policy, the company works with regulatory authorities in each country. Task 1 The main objective of Toshiba involves its obligation to people, future and the Toshiba Group. Commitment to people ensures that the company serves all people particularly the company customers, shareholders and employees through implementations of forward-looking strategies in carrying out responsible business activities that contribute to the goals of the society. The company’s commitment to the future means that the company continually develops innovative technologies in the field of electronic while striving to create products and service that improve the human life. Toshiba’s mission involves delivering technology and remarkable innovative products that contribute to safer, comfortable and productive life by incorporating innovation with passion and conviction for shaping the future while protecting global environment (Toshiba, n.d). The company’s obligation to Toshiba group bases on its total commitments to facilitate creation of high standards of living for individuals. In monitoring the company’s commitment to people, the company ensures that people are supplied with products in order to meet their needs. In monitoring innovation in the company, the company strongly focuses on research and design, with many research and design centres located across the globe mainly in Japan, Europe, Asia and USA. The company’s strong focus on research and design enabled it to sustain itstechnological control in many of its product segments resulting in strong sales. A stakeholder is a party with interest in either a project or even an organisation.The main stakeholders in Toshiba include customers, shareholders/investors, suppliers, employees, local communities, global environment, governments and public bodies. The company’s business activities involve relations with diverse stakeholders in putting the company’s philosophy in practice. The company clearly elaborates its responsibilities to stakeholders, while at the same time requesting opinions in several as well as contemplating and reflecting its outcome in management objectives. The company has a diverse base of customers because of its wide range of products and to improve the engagement with these stakeholders the company can use routine sales activities, monitoring system, customer satisfaction survey and through its call centres. According to Toshiba (n.d), Toshiba in March of 2013 had approximately 446000 shareholders where financial institutions hold 37.3% of issues shares, 32.4% held by individuals and 24.7% held by foreign corporations. For the company to improve its shareholder engagement, the organization may use general meeting of shareholders, investor relations website and meeting with investors. This would be essential in ensuring that responsibilities of the shareholders are carried out in a timely and appropriate manner; moreover, improved engagement would improve and maintain corporate value while responding to the needs organizations linked to the company activities. According to Toshiba (n.d), Toshiba as of March 2013 deals with over 6,000 suppliers across the globe; therefore, for the company to improve engagement with its suppliers it has to routinely carry out procurement activities, CSR surveys and briefing sessions regarding procurement policy. This improved engagement would result in fair and engaging trading practices that respect human rights within the supply chain while at the same time promoting environmental management within the supply chain. Close to 210,000 people are employees in Toshiba across its 591 companies and of all the employees 113,000 work in Japan while another 93,000 work overseas (Toshiba, n.d). To improve engagement with the employees, the company can use dialogues or information exchange meetings that are essential in establishing respect for human rights an diversity, maintaining skills and capabilities as well as optimizing human resources and enhancing their development. Toshiba group has main business sites in more than 30 nations across the globe and in conducting its business operations respects cultures, history as well as customs of people in their region (Toshiba, n.d). In improving the engagement of the local communities, Toshiba can use dialogue or information exchange meetings, factory visits as well as employees participating in the community activities. This engagement promotes respect for diverse cultures, supporting neighbouring communities when there are disasters and engaging in activities within the local communities. Governments and public bodies are stakeholders in Toshiba because the group operates globally; therefore, to improve engagement with these stakeholders the company can use dialogue and proposals through economic associations as well as industry associations. This engagement would result in compliance of laws and regulations while supporting government policies that aim at resolving the social issues. Toshiba also collaborates with NGOs in areas such as human rights, social contributions and constantly endeavour to keep up constructive dialogues with the involved bodies. To improve their engagement, Toshiba can use dialogue through collaboration as well as the exchange of opinions at stakeholder dialogues in order to participate in solving the various global issues either through collaboration with the local communities in solving social problems. Toshiba’s global obligation to corporate social responsibility covers the various aspects of its operations from hiring to environmental activities. The global environment is another essential stakeholder in the company since the company strives to become the leader in environmentally friendly business activities through promotionofbusiness activities that are in accord with the environment. The company strives to be a leading eco-company in order to mitigate climate change, decrease discharge of waste and conserve biodiversity (Toshiba, n.d). Toshiba’s policy is to carry put business operations in a way that is consistent with sound environmental laws and regulations through design and management practices that continually conserve natural resources decrease the use of environmentally sensitive materials. The company highlights green technology in decreasing the emission of greenhouse gases; therefore, the company in its production lines continually develops mitigation strategies aimed at decreasing environmental impacts. As part of its commitment to the environment, Toshiba has made its obligation to decrease its impacts on the environment by promoting great environmental policies in all of its products, processes. To achieve this, Toshiba focuses on effective exploitation of resources, preventing global warming, developing products that are environmentally conscious and recycling products. According to Certified Green Computers From HP, Dell, and Toshiba (2007), Toshiba computers achieved the highest rating under EPEAT of green electronics council. The extend stakeholders influence activities of an organization depend on the relations between the stakeholders and the company and this is illustrated in Mendelow’s matrix that offer a way of mapping stakeholders based on their power to influence the organization and interest. Task 2 An emerging economy is considered an economy with strong growth that increasingly plays a prominent role within the international trade in the international scene (Tremosa I Balcells, 2010); examples of emerging economies that area part of BRICs include Brazil, India and South Africa. Emerging nations faces several challenges with the common challenge being transparency, corruption, social challenges, high crime rates and increased demand for electricity. The ease of doing business in emerging nations like India dropped to position 134 as other emerging markets offer different investment opportunities lie South Africa that was ranked 34 in ease of doing business (Nelson, Maniam&Leavell, 2013). All BRICs nations have a problem of corruptionbecause it usually inhibits business activities by increasing risks and cost; however, some nations like China and Russia stand out.One of Brazil’sbiggest challenge is the high crime rate in cities because of drug trafficking and high unemployment rates that are worsened by regulations that suppress open commerce. The rise and development of large populations create demands that BRICs have difficulties in meeting like the high demand of electricity in India.However compared to command economies like China, emerging economies face various institutional weaknesses that increase the possibility of compromising the sustainability of competitive advantage. Another feature of emerging economy is the macroeconomic environment that is volatile compared to those in command economies; moreover, although economic cycles in command nations are smooth and predictable, economic cycles in emerging nations are usually more intense, frequent and normally followed by a severe crisis. Naturally, command economies like China are stable which guarantee constant exploitation of resources because it is least affected by financial meltdown and inflations. The stable nature of a designed command economy guarantees a sensible level of extra production. As well, a planned economy encourages investors in long-term infrastructure projects without the threat of any financial recession (Economy Watch, 2013). The business Cycle starts with a prosperity phase, and then a recession, which the timeframe between these two points is known as the upper turning point. The phase of depression follows which is referred to as the downswing of the economy. The recovery phase includes the timeframe from Depression to prosperity, and is the period is known to be the lower turning point of the graph. January 2014 marked the sixth year since the start of the US economic downturn after the great depression; as well, the year marked four-and-half years since the subsequent expansion. By measuring against the average duration of prior three expansions, which is under eight years, suggests that the current expansion is in its middle stage suggesting the potential for several more years in the expansion. The US is descending from a mid-cycle on the business model and is likely to continue if the debt ceiling deliberations go on smoothly,even though growth in the economy may not be strong.Various factors influence the position of the country on the recession cycle, which include credit, profit, inventory, and the country’s feds “extraordinary” easy money policy is fairly positioned with regard to the credit cycle. The inventory is better positioned with supply almost meeting demand an indication that most economies spent most of the time in the mid-cycle. This may guarantee that the US will continue in this path even though the country will experience slow and steady growth if policy makers are unable to resolve the issue of debt ceiling (Mahapatra 2013). The US government has been using a policy mix that tightens the budget limit as well as the debt build up while maintaining easy monetary policy in order to spur growth to move out of the recession. As well, the US government has been employing corrective measures like the adoption of corrective fiscal measures in order to restore market confidence but implementing them over duration of time in order to avoid deteriorating the economy further. Some of the promising measures by the budget include energy or gasoline tax and increasing retirement age allowed to access social security that are to be incorporated gradually in order to protect individuals directly affected; hence, these strategies are part of the definitive restoration to a robust US growth (U.S. Economy: Beyond a Quick Fix, 2011). The US government can take steps to influence the economic climate through either direct participation or indirect participation in private markets. The government often has to choose between traditional instruments as the market-based approaches all of which have their pros and cons. Many interventions can result in unforeseen consequences and failure to address indirect costs and the possible spill overs may make the government to end up with a less effective policy and unnecessary economic costs. Government intervention may inadvertently benefit regulated industry instead of the wide public; promote inefficiency because of restricted competition or even ignoring the role of consumers by focusing only on the supply-side of the market.Direct measures to the economic climate may not be the best instruments; for instance, regulation of price, entry and exit or even permitting anti-competitive mergers are blunt measures because they can be less transparent as compared to otherprocedures such as enacting the standards of a product or introducing subsidies. The government has a significant role in coming up with the fundamental framework that encourages the existence of fair, open and competitive economics. The government can set up proper functioning markets through establishment of a competition framework that governs the way in which firms and individuals behave(Office of fair-trading, 2009). Telecommunications sector has a history of regulation mostly because of the monopolistic nature of the industry as well as the different perception of the industry’s role. The industry has always been perceived as a businessaffected by public interest even though the exact definition of public interest vary with time. Therefore, governments regulate them like public services by considering the spectrum of insufficiency, national security anddefence (Nenova, 2007). The three main regulations in the electronic industry include import, environmental as well as safety and export regulations. Import regulation necessitates that electronics comply with import licensing requirements; moreover environmental and safety regulations necessitates that companies in the industry consider consumer safety regulations. To monitor compliance within the export regulations, companies in the industry classify their goods using standardized classification codes that make it easy to check if restrictions apply. In monitoring compliance in import regulations, companies in the industry ensure that they meet the product-specific standards as well as being supported by the applicable certificates and documentation. To monitor compliance with environmental and safety regulations, manufacturers of electronic goods ensure that they can take back and recycle unwanted electronic equipment and the goods have to comply with domestic safety regulations and standards (GOV.UK, 2014). WEEE regulations apply to the various EEEwithin the UK market through several regulations like those that allow consumers to access designated collection facilities across the country where they can freely return WEEE (‘WEEE Regulations 2013 Government Guidance Notes’ 2013). Task 3 Perfect competition is a market structure that takes four characteristics that include many sellers within the same market offering the same product; with buyers and merchants aware of the market and prices.Defined by the free entry into and exit from the market and where no individual seller or even buyer can influence the price because the price is determined by the supply and demand in the market (Mastrianna, 2010). In the electronic industry, there are many sellers offering similar products; however, buyers are not well informed of the market and the prices compared to the sellers. Industry of electronics into the market is not necessarily free because electronics have to undergo a series of regulations in order to enter the market; as well, the price may not always be under the influence of supply and demand within the market. Since the global market for tablets is expected to record strong growth in future because of the increased demand for small screen devices owing to ease of use, portability as well as competitive pricing of the tablets. The company because of the increased demand of tablets introduced thin and lightweight tablet leveraging on the company’s TV and PC technologies that allowed the company to introduce one of the thinnest and lightest HD tablets with LCD display. This growth of tablets’ demandis good for the Toshiba because the increased demand enabled the company to develop one of the world’s lightest tablets that is capable of resulting in better revenues for the company. Toshiba PESTLE analysis Political factors The increasing concern of the impact of high tech trash led to more stringent environmental regulations within the electronics industry andthe additional testing and certification direct affect supplychain resulting in high cost (Abhinav& Shah, 2009). Economic Factors Global economy affects various factors that influence growth of electronics industry and since the economic recession in 2008, the industry experienced a decrease in capital spending, which consequently resulted in decreased demand. However, economies in developing nations are growing at a higher rate compared to developed nations, which offers a better growth opportunity for the company (Abhinav& Shah, 2009). Social Factors Social factors like education, income levels as well as cultural factors affect demand patterns in various regions and ends up affecting the way a company operates in each region. Cultural aspects in different regions influence occurrence of seasonal sales that significantly impact the performance of the electronic industry (Abhinav& Shah, 2009). Technological Factors Technological advances in the last decade have witnessed increased processing power and power consumptionremains one of the main drivers of Toshiba electronic devices. However, new technologies like hosted virtual desktops threaten Toshiba electronics market because it threatens to change the dynamics of the industry (Abhinav& Shah, 2009). Legal Factors Toshiba being a telecommunications company is bound by the various regulations in the electronics industry such as the environmental and safety regulations, import regulations as well as export regulations. Environmental Factors Toshiba faces a lot of competition in the environment across all its businesses with regard to price, brand, quality, reputation, technology as well as the distribution of its products. The company competes with various major international organizations within its market with the key competitors being Dell, Lenovo, Acer, HP, Canon and NEC among others. The company’s external environment is rife with competitors; however, with the increased demand of tablets and the positive outlook for the global semiconductor market as well as the increased popularity of e-commerce offer Toshiba unique opportunities. Task 4 International trade is important because it allows the exchange of goods and services across borders and promotes growth and development as goods are transported from one nation to another. In Toshiba, international trade is essential since it presents unique opportunities for the company to reach new markets and increase its revenue while meeting the needs of the population. By levering its products, the company is bale to benefit from the development trend across the globe because of the increased demand for semiconductors. To serve demand overseas, the company invests in proactively allocating resources as well as developing optimal sites. According to Harding (2010), Toshiba is proactively advancing toward expanding its LCD TV business across the globe and thisstrategy by Toshiba establishes localized production and supply of LCD TVs within the Middle East. This strengthens the ability to supply the company’sproducts that are capable of meeting the requirements of the local regulation while offering improved cost competitiveness for the organization. Understanding national culture for an organization expanding to other nations is essential since national cultures are embodied institutions from government agencies to economic as well as business organizations. Understanding national culture for Toshiba is an essential part in its overseas companies because national culture affects the way managers and employees decode and interpret their role. Hence, the need to understand national culture because differences in national culture can result in development of opportunities as well as serious problems if not understood. In India, Toshiba appointed an Indian to head the company’s consumer goods business in order for the company to survive in India and the need for localized products sold by Indians who understand the market. According to Clarke and Daley (2010), Eurozone is the name given to describe the member states that use EU’s single currency. The 2007 financial crisis caused prolonged world economic downturn with specific countries within the EU being badly hit among them Greece. A strong and stable Eurozone is in interest of UK’s interest because over 40% of UK’s exports directly end up in the Eurozone. Moreover, Eurozone is an essential partner to UK investment because experts, banks and investment houses in n facilitate the region most profitable activities (Foreign & Commonwealth, 2011). Appendix EPEAT - Environmental Product Evaluation and Assessment Tool EEE - Electrical and Electronic Equipment WEEE - Waste Electrical and Electronic Equipment References Abhinav, D. & Shah A. 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