Toshiba
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Toshiba’s Westinghouse Dilemma
Toshiba, incorporated as a telegraphy shop in 1875, was an embodiment of Japan’s industrial growth and rated a blue-chip fortune 500 global corporations. The company’s growth expanded exponentially, in the 1980s and 1990s, primarily due to Japanese incentives to encourage innovation, using low-interest loans, artificial limits, and subsidies (Toshiba Westinghouse Dilemma 2). However, the company’s success began to fade due to the entrance of low-cost companies from Asian countries, which started to offer products at lower prices, leading to declining revenue in Toshiba’s personal computers. The 20 accounting and governance scandal has adversely affected the company’s growth and success in the markets globally. What went wrong at Toshiba?
Toshiba’s failure stemmed from a wide range of problems inherent to the company’s management and strategic decision-making. The primary concern was that the management put immense pressure on the subordinates to meet outrageous goals, emboldening lowly-ranked managers and supervisors to engage in inappropriate accounting practices. Besides, despite high competition from other companies selling similar products as Toshiba, the company failed to innovate. Moreover, its top-down culture created a toxic relationship between leaders and their subordinates. As a result, most illegal accounting practices were unreported because junior employees did not have confidence in their seniors (Toshiba Westinghouse Dilemma 2). Increased focus on organization-wide profit generation allows employees to manipulate earnings,
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making it impossible to continually whistleblow or the internal control systems to detect fraudulent dealings. Furthermore, the 2015 accounting and governance scandal had already damaged its reputation, aggravating its financial struggles. Therefore, Toshiba faced numerous ethical, management, and fraud issues, contributing significantly to its challenges. Was PwC correct in believing that the losses should have been booked earlier?
PWCwas correct in believing that Toshiba’s losses stemming from Westinghouse unit should have been disclosed in 2015. The company’s responsibility is to promote transparent and ethical accounting principles, standards, and regulations. For this reason, Toshiba should have accounted for the losses in 2015 and not the fourth quarter of 2016 (Toshiba Westinghouse Dilemma 4). Such an incident highlighted the continually growing accounting challenges and malpractices that the company failed to address. As an international company, Toshiba should have adopted ethical and principles accounting practices to regain its trust with the customers and restructure its management and culture to foster growth. Therefore, PwC was right in emphasizing that the losses should have been booked earlier.
Based on TSE’s delisting criteria, should Toshiba have been delisted?
TSE had the right to delist Toshiba because the company made false statements and engaged in fraudulent activities, jeopardizing shareholders’ capital or wealth. Furthermore, PwC had expressed an adverse opinion regarding its financial statements following its failure to disclose losses on time and other accounting malpractices (Japan Exchange Group). Toshiba has been involved in increasingly growing and inappropriate accounting practices against the TSE regulations and company listing guidelines. Therefore, TSE had all the rights and reasons to delist Toshiba.
Overall, Toshiba’s cases highlight the challenges most companies face amid
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technological changes and globalization. The company failed to establish innovative strategies to
remain competitive and profitable, losing its market share to other highly innovative companies. On the other hand, the company could not implement excellent employee management techniques, change its corporate culture, and establish critical internal control systems, which would have helped the company identify and rectify accounting malpractices. Toshiba also failed
to cultivate a culture of ethics, honesty, and integrity among employees, who should have whistleblowing before things got out of hand. Therefore, Most of Toshiba’s challenges were self-
inflicted and deserved to be delisted so that it could reorganize itself and build its brand again.
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Works Cited
“Toshiba Westinghouse Dilemma.” Harvard Business Publishing Education
, 2020.
Japan Exchange Group. “Criteria for Delisting.” Japan Exchange Group
, 30 Apr. 2021, https://www.jpx.co.jp/english/equities/listing/delisting/02.html. Accessed 14 March 2022.
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Why do companies go global?
Multinational corporations operate in locations across the world. Each company has its own motive for its presence in different countries.
Consider the following case:
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Table 1
Capital Endowment
Labor Endowment
Country
(Billion 1966 $)
(1,000 Persons)
AB
6,597
785,933
12,470
76,595
The United States' comparative advantage over Japan in the production of rock-n-
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opportunity cost of production is less in Japan.
absolute cost of production is less in the United States.
absolute cost of production is less in Japan.
opportunity cost of production is less in the United States.
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Question 1
Which of the following is a societal consequence of market globalization?
a new risks and instant rivalry from foreign competitors
b. offshoring and the flight of jobs
C.
internationalization of firm's value chain
d. greater emphasis on proactive internationalization
Question 2
The fourth phase of globalization is characterized by
a. the reduction of barriers to trade by Western industrialized countries
b. the rise of railroads and ocean transport
C.
the enormous growth of cross-border trade and investment
Clear my choice
d. the initiation of the Marshall Plan to reconstruct Europe
Question 3
C.
Each of the following has contributed to the rapid growth of trade among nations EXCEPT
a. the growth of emerging market countries
b, the liberalization of markets
the increase in trade barriers
d. advances in information technology
Clear my choice
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Question 12
Which of the following is an example of a greenfield investment made by a foreign company in the UAE?
Mcdonald’s USA opens a franchisee restaurant in Dubai Mall
Amazon US partners with Careem in UAE
Uber US acquires Careem in UAE
IBM opens an IBM fully owned subsidiary office in Dubai
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Question: Classify each of the following as debits or credits in the U.S. balance of payments.
Americans buy chocolate from the Swiss.
U.S. gives foreign aid to Bosnia.
British investors purchase U.S. government bonds
American tourists travel to Australia
Volkswagen earns profits in the United States from its new cars
Toyota builds a new plant in Ohio
Capital Records sells rock and roll music in Sweden
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4. Interest rate parity
The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better
technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk.
This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk.
The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following:
An American investor is considering investing $1,000 in default-free 90-day Japanese bonds that promise a 4% annual nominal return.
• The spot exchange rate is ¥101.12 per dollar.
• The 90-day forward exchange rate is 100.25 per dollar.
The investor's annualized return on these bonds-if he or she can lock in the dollar return by selling the foreign currency in the forward market-will
be…
arrow_forward
The rise of globalization is due to the many companies that have become multinational corporations for various reasons—for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well—for example, political risk and exchange rate risk.
The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following:
Suppose you observe the following spot and forward exchange rates between the U.S. dollar ($) and the Canadian dollar (C$):
Spot Exchange Rate
One-Year Forward
Exchange Rate
Canadian dollar (U.S. dollar/Canadian dollar)
0.8932
0.9133
The current one-year interest rate on U.S. Treasury securities is 8.03%. If interest rate parity holds, what is the expected yield on one-year Canadian…
arrow_forward
The rise of globalization is due to the many companies that have become multinational corporations for various reasons—for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well—for example, political risk and exchange rate risk.
The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following:
Suppose you observe the following spot and forward exchange rates between the U.S. dollar ($) and the Canadian dollar (C$):
Spot Exchange Rate
One-Year Forward
Exchange Rate
Canadian dollar (U.S. dollar/Canadian dollar)
0.8798
0.8935
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global finance
21. The _____ Era saw the rise of a growing schism between the industrialized and emerging market nations.
22. A ________is any restriction that limits or alters the rate or direction of capital movement into or out of a country.
23. An extreme problem that has emerged several times in international financial history is ______,one of the problems that capital control has designed to control.
25. The _________ i.e. the risk associated with the business line of the individual firm can be eliminated through portfolio diversification by investors.
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Short answer
What are two major reasons why companies expand abroad? Explain using examples
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Question 15
According to the NFIB (from a prior class discussion), what percentage of all companies launched in the USA were started with less than 500 USD?
25%
95%
60%
10%
Question 16
Statistically, angel investors tend to be .
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female
male
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Recommended textbooks for you
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Century 21 Accounting Multicolumn Journal
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