Revival of Matsushita

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Case Details:

Case Code : BSTR101
Case Length : 11 Pages
Period : 2000 - 2004
Organization : Matshushita Electronics
Pub Date : 2004
Teaching Note : Available
Countries : Japan
Industry : Consumer Electronics

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Consumers are flocking to stores to get their hands on DVD recorders, and when they buy they are buying Panasonic."

- Reid Sullivan, Vice President of Panasonic's Entertainment Group, 2002.¹

"We are proud of what we've done. But we're not about to become complacent"

- Yukio Shohtoku, Executive Vice-President of Matsushita Electric Industrial Co, 2003.²

Matsushita Reborn

In the early 2000s, the stores in Japan displayed a wide variety of consumer electronics gadgets like palm-size camcorders, DVD recorders, plasma TV, etc.

These product offerings from Matsushita's Panasonic brand attracted more attention and recorded higher sales as compared to the competitors Sony Corporation³ and Toshiba Corporation's⁴ products.

The print and electronic media ran commercials on the theme, "Panasonic: Ideas for Life". And analysts commented that the brand Panasonic had been reborn. Matsushita manufactured various consumer electronics goods ranging from kitchen electrical appliances, factory automation devices to modern electronic gadgets. In the 1990s, consumer appliances, Matsushita's bread and butter category, registered a decline in profits.

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The reasons: the Japanese style of management resulted in a large and aging workforce. The close monitoring of the subsidiaries by the holding company acted as a hindrance to the growth of the subsidiary companies. Matsushita's policy of acquiring technology from the partners and mass manufacturing failed in the 21st century.

The diversified group was difficult to manage. Kunio Nakamura (Nakamura) who took over as president of Matsushita in 2000 transformed the 85-year-old company into a super manufacturing company ready to face the competition in the 21st century.

Under his leadership, those companies under the Masushita group that were not performing well were closed down or sold. The Companies in the same area of business were merged to avoid duplication of efforts in the group. The reforms in various areas like R&D and sales and distribution were done to reduce inefficiencies. In March 2003, Matsushita's operating profit was $574 million on net sales of $61,680 million.⁵

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1] www.digitalproducer.com

2] BusinessWeek, July 21, 2003.

3] Sony Corporation is the No. 1 electronics equipment manufacturer in Japan. It produces audio, video, communications and information technology products for global consumer and professional markets.

4] Toshiba Corporation is a manufacturer of electrical and electronics products in Japan. It has diversified into areas like computers, home appliances, industrial systems, electronic components, Medical Systems, Power systems, Elevators and Building systems.

5] Matsushita Electric Annual Report 2003.