Toshiba Corporation Early History:
Early Company History:
Toshiba was formed in 1939 by the merger of Shibaura Seisaku-sho (Shibaura Engineering Works) and the Tokyo Electric Company. Shibaura was the older of the two companies and was formed by Hisashige Tanaka, known as the 'Edison of Japan.' Tanaka employed the strategy of building a technological foundation by purchasing the designs to technology developed by western powers in the late 1800's. This allowed Shibaura Engineering Works to expand rapidly and begin to develop their own technology base. The isolation from the supply of foreign materials during WWI forced Japanese companies, including Shibaura and Tokyo Electric Company, which had been established in the 1890's, to develop a degree of self-sufficiency and cooperation among the major companies to deliver products. Once the merger between Shibaura Engineering Works and the Tokyo Electric Company was complete, they changed their name to Tokyo Shibaura Electric Company, but became known as Toshiba. The name Toshiba was not officially adopted until much later, in 1978.
After WWII, Toshiba experienced a favorable business climate with the support of the American Occupation Authority and access to international markets once again. Toshiba went public in 1949 on the Tokyo Stock Exchange, which helped strength its competitiveness in the market and begin a phase of rapid expansion. Toshiba began to offer broadcast communication equipment, digital computers, and microwave ovens as the 1950's progressed, supplying industry and consumers alike.
Evan as Toshiba was growing; its fundamental culture began to take a toll on the company. Toshiba had established itself as a very hierarchical company with levels of bureaucracy that was stifling to growth and even regular decision making. Numerous signatures were required by executives for simple document approval, delaying decisions and removing responsibility from any one executive. The recession of the 1960's hit Toshiba worse than many of their competitors, in part of the culture that had been instilled in the company. As Toshiba was approaching a point where they would no longer be profitable, they called on outside assistance to help turn the company around. Toshiba brought in Toshiwo Doko, who had lead the merger that resulted in the largest shipbuilder in the world, IHI, to take over the company.
Doko implemented several changes at Toshiba which improved Toshiba's outlook, but Toshiba's growth was still overshadowed by even their domestic competitors such as Sony. During Doko's leadership, Toshiba reduced their dependence on debt financing, modernized their operations, transformed their salesforce, management and operations and placed a new emphasis on growing exports worldwide.
In 1980, Doko was replaced by Shoichi Saba, an electrical engineer. Saba focused efforts on developing new technology and products, especially semiconductor, computer, and telecommunication products. Toshiba's investment in R&D began to bear fruit in 1985 with the development of the first 1MB DRAM chip, which allowed it to dominate the market, providing almost half of the 1MB DRAM chips a mere two year later. Toshiba partnered with Motorola and AT&T in 1986, developing and marketing telecommunications technology called digital private exchange systems or PBXs which allowed routing of phone calls within a building.
The many successes of Saba were overshadowed in 1987 by a scandal involving sale of technology through a Toshiba subsidiary to the Soviet Union in violation of a law restricting such sales. Executives at the subsidiary were arrested and a management shakeup ensued. The U.S. response was to ban the import of any Toshiba product for a period of three years which caused Saba to tender his resignation to Toshiba.