Revival of Matsushita

The deal cost the Matsushita group $6.59 billion. The acquired firm had problems with Matsushita's bureaucratic style of management. Matsushita executives would turn down MCA's request for funds and there was a communication gap because Matsushita executives didn't know English. In 1995, Matsushita sold 80% of its stake in MCA Inc., to the liquor company, Seagram. Matsushita lost ¥164.2 billion through the MCA stock sale, due to foreign exchange losses. In the financial year 1991-1992, Matsushita had interest bearing debts as high as ¥2.755 trillion on the books. In 1993, Tanii resigned, accepting the responsibility for the sharp drop in profits and 700,000 defective refrigerators, which the company had to call back...

The plan consisted of two parts - destruction of the old management structure and creation of a new one to compete in the 21st century. The destruction phase was aimed at reducing the inefficiencies in the company with the help of structural reforms. In the creation phase, the company wanted to develop V-products (products with high margins) and launch them in the domestic and overseas market. The concrete objectives of the plan were to increase the operating margin from 2.2% in 2000 to 5% in 2004 and make consolidated annual sales of $81 billion, by 2004, increase overseas production to 40% of total manufacturing by 2004 from 30% of total manufacturing in 2000...