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Sunday, March 26, 2023

Toshiba 2023: The Beginning

Toshiba’s $15 billion sale to a group led by private equity firm Japan Industrial Partners.

One shoe of many has dropped.

An article in Japan Times outlines a few internal challenges yet to be addressed.  One alarming statement is, "The most worrying factor is if the new CEO does not get to actually make decisions.”

Of all the hurdles any organization must overcome when making a comeback, it is the ability for leadership to lead; to make decisions, any decisions.

Under Thursday’s agreement — originally expected last fall — the JIP-led consortium aims to buy Toshiba at ¥4,620 a share and take one of Japan’s most well-known brands private through a tender offer to begin around late July. If successful, the deal could close a troubled chapter in the firm’s 147-year history, after a series of scandals and missteps set it on the path to a sale. The questions now are whether activist investors will accept the terms — and whether the firm can restore its former glories.
The question comes down to how this will impact the US Office Technology providers and the many customers.

You know the pattern.  PE takes a conglomerate private then slices and dices the component parts off in hopes of turning a profit. That's what will happen here.

Three Points:
  1. Toshiba's Leadership Changes: The article mentions the recent departure of Toshiba's CEO and several board members, which has added uncertainty to the company's direction and future.
  2. Business Transformation Plan: Toshiba has announced a comprehensive plan to split the company into three standalone entities focused on infrastructure services, devices and storage, and industrial products. This restructuring aims to streamline operations, improve agility, and enable each division to better address its respective market needs.
  3. Addressing Geopolitical Risks: The article highlights the challenges Toshiba faces due to geopolitical tensions, such as the Taiwan Strait issue, and the ongoing global chip shortage. These challenges underscore the need for Toshiba to diversify its supply chains, explore alternative sources for critical components, and expand its global footprint in order to mitigate risks and ensure future growth.

Rocky road to Toshiba deal raises doubts about a future comeback

Toshiba's future is at a critical juncture, with the company facing challenges not only from geopolitical tensions and global supply chain disruptions but also from internal struggles and restructuring efforts. The recent departure of Toshiba's CEO and several board members has added uncertainty to the company's direction, further highlighting the need for robust planning and strategic decision-making.

To address the issues and solidify its future, Toshiba has announced a comprehensive business transformation plan. The plan includes splitting the company into three standalone entities focused on infrastructure services, devices and storage, and industrial products. This restructuring aims to streamline operations, improve agility, and enable each division to better address its respective market needs.

In light of the ongoing global chip shortage and the potential for further disruptions due to tensions in the Taiwan Strait, Toshiba's Devices and Storage division must prioritize diversifying its supply chains and exploring alternative sources for critical components. This will help to insulate the company from geopolitical risks and ensure a more stable supply of essential parts.

Toshiba's Infrastructure Services division should also explore opportunities to expand its global footprint, with a focus on regions less affected by geopolitical tensions. By doing so, the division can reduce its reliance on a single market, spread risks more evenly, and ensure continued growth in a challenging global environment.

How this will impact the US Office Technology providers and the many customers?

The changes and challenges faced by Toshiba, a significant player in the global office technology sector, can have implications for US office technology providers and their customers in various ways:
  • Market Opportunities: With Toshiba undergoing a significant transformation, US office technology providers may find new opportunities to fill any potential gaps in product offerings or services. As Toshiba restructures and refocuses its efforts, competitors can seize the opportunity to capture market share, expand their reach, and strengthen their positions.
  • Supply Chain Disruptions: Given Toshiba's role as a supplier of essential components, such as semiconductors, to other technology companies, any disruptions in their supply chains due to geopolitical tensions or other factors could have a ripple effect on US office technology providers. These companies might face component shortages or increased costs, which could impact production timelines, product availability, and pricing for end customers.
  • Collaboration and Partnerships: As Toshiba seeks to diversify its supply chains and forge new partnerships, US office technology providers could potentially benefit from increased collaboration opportunities. This could lead to the development of innovative products, sharing of resources, and a more resilient, interconnected supply chain that benefits the entire industry.
  • Industry Adaptation: Toshiba's restructuring and focus on addressing geopolitical risks may serve as a wake-up call for the entire office technology sector, prompting US providers to reevaluate their own supply chain strategies and prepare for potential disruptions. Companies that learn from Toshiba's experience may take proactive measures to mitigate risks and maintain business continuity in the face of future challenges.
For customers of US office technology providers, the implications of Toshiba's situation could manifest in several ways:

  • Product Availability and Pricing: Supply chain disruptions or increased competition may lead to changes in product availability, pricing, or delivery timelines. Customers may need to adapt to these fluctuations by seeking alternative suppliers, adjusting budgets, or making other accommodations.
  • Innovation: As companies in the office technology sector respond to challenges and look for opportunities, customers may benefit from increased innovation in products and services. New partnerships and collaborations could lead to the development of advanced technologies or solutions, ultimately improving the customer experience.
  • Market Dynamics: As the industry adapts to geopolitical risks and other challenges, customers may witness shifts in market dynamics, with some companies emerging stronger and others struggling to maintain their positions. This could influence customer choices when selecting office technology providers, as they seek the most reliable and forward-thinking partners to meet their needs.
The Industrial Products division, which deals with products like motors, inverters, and factory automation systems, can benefit from increased investments in research and development. This will allow Toshiba to stay at the forefront of innovation and strengthen its market position, regardless of external geopolitical factors.

The challenges faced by Toshiba and its subsequent restructuring efforts have far-reaching implications for the global office technology sector, including US providers and their customers. As the industry navigates geopolitical tensions, supply chain disruptions, and an ever-evolving market landscape, it is crucial for companies to learn from Toshiba's experience and adapt accordingly.


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