This document provides an analysis of Toshiba's focal factory concept. It discusses: - How Toshiba's Yanagicho Works factory was designed as a "focal factory" to concentrate on product development through integrating R&D, manufacturing, and distribution. - Key differences between focal factories and mass production factories, with the former focusing on organizational flexibility, technological adaptation, and producing a continuous stream of innovative products. - How focal factories addressed problems of late industrialization in Japan through rapid learning, experimentation, and generating novel solutions. - The interdependence between Toshiba's factories and "honbu" (business sectors), with factories implementing strategic visions and converting resources

1. Focal Factory – Toshiba
Case Analysis
By
V.V.L.N. Sastry
EPGSBL, IIMC
29th November 2019

2. "You can have
long
any colour you
want, as as it's black".
Henry Ford, Ford Motor Company
Owner.

3. Mass Production
• The Ford Motor Company
was one of the first
industries to use the
method of "Mass
Production".
This meant assembly
lines were set up with
every worker doing a
simple job time and time
again.
Many unskilled workers
could find jobs for the first
time and had a steady
wage.
•
•

4. How did this affect people?
• Many working class
people were getting a
steady wage.
Business owners like
Ford were making huge
profits.
Because production was
fast (a car finished every
10 seconds) they were
cheap to buy so many
Americans had luxuries
for the first time. A Model
T Ford was just $295 in
1920.
•
•
w;
~. ..

5. Cycle of Prosperity
Increased
production
Increased
employment
Increased demand
for consumer
goods.
More money
available to spend
on goods.

6. Who didn't prosper?
• People living in cities like Detroit were
much better off, but not everyone was
affected.
Many businessmen• still had racial
prejudices and would
workers.
only take on white
• Ford, himself, was anti-Semitic.

7. FOCAL
FACTORIES
(SAHA,
BANERJEE,
AND
KAKANI,
2011)
Designed to be a concentrated site of product
development, where geographic concentration in a
factory could allow strong coordination to evolve
integrating R&D, manufacturing, distribution — every
aspect of the product, so to speak.
Multifunction and multi-product, the focal facts
were categorically different from mass-production
facts with distinctive management styles and
structures to integrate planning, design, product
and process engineering.
Organizational flexibility technological adaptation
and mental labor are institutional traits of a focal
factory and liveliness and a deeply negotiated
hierarchy in the workplace are some behavioral
features. They were mandated to produce a
continuing stream of innovative products rather
than a stable mass manufactured product.

8. FOCAL
FACTORIES
(SAHA,
BANERJEE,
AND
KAKANI,
2011)
Multifunction and multi-product, the focal facts
were categorically different from mass-production
facts with distinctive management styles and
structures to integrate planning, design, product
and process engineering.
Organizational flexibility technological adaptation
and mental labor are institutional traits of a focal
factory and liveliness and a deeply negotiated
hierarchy in the workplace are some behavioral
features.
They were mandated to produce a continuing
stream of innovative products rather than a stable
mass manufactured product.
Multi-specialization teams would work on projects,
building prototypes, scaling up production and
setting up tooling, negotiating the distribution and
sales coordination mechanism in a series of
temporal activities as a product idea evolved.

9. FOCAL
FACTORIES
(SAHA,
BANERJEE,
AND
KAKANI,
2011)
Any time, several such projects would be on and
several products would be manufactured at the factory
with different degrees of maturity.
In other words, the focal factory did not concentrate
on a product; in fact, there would be too much variety
in product basket, which would change and evolve
quite rapidly over time. But it was concentrated and
specialized in another sense — that was very contextual.
It was a focal point of learning technology and
experimentation, largely with Western technologies, but
providing unique spins to it-where engineers,
technologists and skilled workers would have the
creative play of tinkering, experimenting and learning
such tools.
It was a specific outcome of late industrialization and
intense urge to play a quick catch-up under resource
conditions and skill scarcity that defined the context.

10. PROBLEMS
ADDRESSED
BY FOCAL
FACTORY
(SAHA,
BANERJEE,
AND
KAKANI,
2011; FRUIN,
1992)
Toshiba's concept of a 'focal factory' - the Yanagicho Works -
provides an instance.
A factory mode is generally thought of as a means of
concentration of production — so that mass manufacturing
advantages can be taken care of.
But in the case of Toshiba focal factory, the factory mode started
playing (or was designed to play) a completely different function
from somewhere between the war years and the last quarter of
the 20th century.
It was a specific outcome of late industrialization and intense
urge to play a quick catch-up under resource conditions and skill
scarcity that defined the context.
The focal factory is the site of generation of increasing returns-
where structural fluidity allowed learning to happen very quickly,
generating novel solutions, some of which reached high volumes
of mass manufacturing and became blockbuster products, while a
much larger number remained low-volume limited -period
offerings.

11. PROBLEMS
ADDRESSED
BY FOCAL
FACTORY
(SAHA,
BANERJEE,
AND
KAKANI,
2011; FRUIN,
1992)
Those reaching mass production
reached more stable structures of mass
production and was managed In a
more traditional mass-production mode.
The world mostly not notified the
products that reached large scales, but
more engineers and skilled workers in
Japan worked on low volume products
than the mass-valves themselves,
experimenting and learning It
constituted the core on which
organization learning and evolution was
based and was the key organizational
idea center.

12. TOSHIBA
CORPORATION
AND THE
YANAGICHO
WORKS:
FUNCTIONAL
INTERDEPENDENCE

13. DISAPPEARING
SBUS: BACK TO
BASICS?
In a somewhat surprising reversal, in April 1987 the Toshiba
Corporation aborted the sector-level of organization or
what had been known as Strategic Business Units (SBUs).
Apparently, the thinking was that the concept of SBUs had
become so thoroughly internalized within the major divisions of
Toshiba that a separate organizational hierarchy to
accomplish SBU objectives was no longer necessary.
At the same time, however, Toshiba has emphasized the
importance of cross-divisional and cross-factory integrated
activities while renewing the importance of groups and
divisions as profit centers, and these ambitious goals and
redefinitions certainly reflect the legacy of SBUs for the firm.
The elimination of SBUs at Toshiba has resulted in a five-tiered
organizational structure, when viewed from the level
of the factory: factories; business units (BU), divisions, divisional
groups (sectors), and corporate offices

14. By March 1989, computers, information systems, and
industrial electronics accounted for 53 percent of
Toshiba's sales, relegating heavy electric goods and
consumer electronics to a minor position in the
company's earning stream. The restructuring of Toshiba,
catalyzed in part by the introduction of SBUs, had been
successful. Of the Big Three comprehensive electric-
equipment makers, Hitachi, Mitsubishi Electric, and
Toshiba, only Toshiba garnered more than 50 percent of
248 FOCAL FACTORIES
its sales from businesses other than heavy equipment
and consumer goods by 1989.
Toshiba's four ‘business sectors’ (honbu in Toshiba talk)
had become rarefied SBUs in effect. They were strategic
units
where matters of planning and positioning for entire
product families occurred, and they were the
organizational units where resources were mobilized and
aligned. Honbu managed products. Factories managed
the process of making products.
DISAPPEARING
SBUS: BACK TO
BASICS?

15. EMERGENCE
OF HONBU
AT TOSHIBA
The capabilities and know-how to convert resources into
products linked factories to honbu in a direct and unequivocal
way. Honbu, rarefied SBUs, were analogous, interdependent, and
symbiotic with factories. Neither one
could do without the other.
Because multi-function, multi-product factories produce for many
BUs and several divisions within a honbu, they harbor the
organizational capabilities underlying product planning across the
firm; they effect crucial transfers of
technology and personnel; they capitalize on experience,
converting manufacturing running time into organizational
learning.
If it could be fairly said that SBUs were brought down to earth by
having divisions and sectors absorb their strategic promise, by the
same token focal factories were raised up high as omnibus sites
where strategic visions are implemented. They are the systems-
converters in today's world of complex, intermingled technologies.
The interdependence of factory and firm, a primary thesis of this
study, was graphically revealed in an organization chart
drawn by the head of the (IC) Card Systems Department at
Yanagicho in February 1990

16. Thank you