Matsushita:
From National Exports to
Global Innovation
Presented by:
Jesse Kedy

Company Timeline - 2000: Production shifts to
low-cost Asian nations: 50% of
- 1977-85: MC factories and staff offshore
- 1950’s: Trade insources VCR - Mgmt unwilling to restructure
- 1918: or lay off staff (inefficient
liberalization & production from GE,
Company culture)
lower shipping RCA, and Zenith.
founded by - Investment in R&D incubator
costs allow for Capacity increases
Konosuke in CA
internationalization 33-fold (prices drop)
Matsushita
1920 1930 1940 1950 1960 1970 1980 1990 2000
- 1932: - 1960’s: Pressure - 1982: Operation
from host governments Localization (LA) -1991: Acquires MCA for $6.1
250-year plan
leads to opening of - 1985: VCR sales: billion. Vertical Integration
unveiled (160
plants in South 45% of profits - 1989-1999: Excess capacity;
employees)
America & SE Asia. - New Pres.; re- New competition form China &
First efforts to globalize centralization (GI) Korea; Japanese CE market
plummets 50%
- New Pres., decentralization
(LA); Cost-cutting

Issues of Global Competitiveness
• Lack of Competitive Core Products
– Excess Capacity
– Innovation
– Regional Market Preferences
• Subsidiary Over-dependency/Corporate Culture
– Local Consumer Needs
– Employment Policies

Company Strengths
• Progressive outlook dating to 1932
• Infrastructure built to capitalize on
economies of scale
• Focus on research
• Brand strength of Panasonic

Company Weaknesses
• Lack of innovation in subsidiaries
• Excessive reliance on economies of scale
• Outdated corporate culture
• Internationalization v. globalization
• Inefficient business segments (JVC)

International Competitiveness within the
Consumer Electronics Industry (70’s - 90’s)
Global
Integration Matsushita
Sony
Philips
Local
Responsiveness
Product
Innovation

Industry Opportunities
• New Markets:
– BRIC
• Developing Technologies Offshore (i.e. China)
– Shift more R&D offshore
– Clusters; Incubators; technology parks
• Jump on the Consumer Revolution Bandwagon
– Internet
•Marketing
•Direct sales

Industry Threats
•Cost-volatility of raw materials & suppliers
•New Competition: Korea & China (CE global glut)
•Pressure from host governments
•National, Regional, and Global Economies
Examples of Volatility
– 1992 recession: Japan’s CE market halved in a
decade (89-99)
– 1997 Asian Financial Crisis
– Exchange rates: strong yen – exports become less
valuable

Updated Sales & Profitability
Performance: 1970- 2006
Net Sales Before Income Taxes Net Income
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
(1,000)
05
06
70
75
80
00
02
03
04
85
90
95
20
19
19
19
19
20
20
20
20
19
19
20

Net Income as a Percentage of Sales
8.00%
6.00%
4.00%
2.00%
0.00%
- 2.00%
- 4.00%
- 6.00%
- 8.00%
70
75
80
85
90
95
00
02
03
04
06
05
19
19
19
19
19
19
20
20
20
20
20
20

Business Units as Percentage of 2006 Sales
JVC
7% Other
13% AVC
Networks
MEW & 38%
Panahome
17% Home
Components
& Devices Appliances
13% 12%

Possible Solutions
Contract w/ Wal-Mart Supply Chain Solution
+ Global sales increase +Vertical integration
+ Leverage economies of + Negotiate materials
scale advantage costs
- Thin margins - Fewer Suppliers
- Loss of brand equity Risky
- Reduced flexibility

International Competitiveness within the
Consumer Electronics Industry (today)
Global
Integration Matsushita
Local
Responsiveness
Product
Innovation

Recommendations
1. Corporate Culture
2. World-Class Product Technology
• Localized R&D
• New, strategic products
3. World-class Brand Identity
• National brand in China & Middle East; Japan
• Localized advertising
4. Global Markets (focus: China)
• Phase out National
• R&D in China
• Barriers to entry

Panasonic Ad Campaign
“Panasonic ideas for life.”
• National ad (1954)
• New Products
• Targeting a New segment (US)
• Animals (UK)