International Business Management

Sam Ledger Matsushita Corporation: Global Advantage

Georgetown University: Executive Masters in International Business, Module- 1 Matsushita Corporation: Global Advantage

Table of Contents Overview ...... 2 Matsushita Global Advantages of Multi-Nationality ...... 2 Through the Leadership of Mr. Konosuke Matsushita ...... 3 The Organizational Structure of Matsushita Corporation ...... 4 Matsushita Reconfiguration and Coordination ...... 4 Future Direction of Matsushita ...... 5 Conclusion ...... 5 Works Cited ...... 7

1 Matsushita Corporation: Global Advantage

Overview Both Philips and Matsushita Corporations have been very successful over the years providing products during times of war, global economic depression, and economic prosperity. The foundations of both corporations were guided by similar principles of good structure, aggressive marketing, and constant growth of technology. In addition, each corporation started by focusing on hardware, and then establishing strong manufacturing practices and international/global sales distributions. However, after World Word II, they appeared to diverge in their core organizational structure and approaches by different methods of entrance or expansion into global markets. Philips focused on a more liberal transnational strategy while Matsushita maintained a global strategy maintaining a core culture based in Japanese culture. In the end, the approach by Matsushita Corporation succeeded as the most successful while Philips continue to reorganize, divest, and reshape the corporation with limited to no success. Therefore, Matsushita emerged as the dominant and most successful of the two corporations.

Matsushita Global Advantages of Multi-Nationality When first established in Japan, Matsushita started as an ethnocentric corporation that was highly domestic strategy focused, conducting global exports of all goods manufactured from within country. During global expansion the structure and organizational approach used was a global strategy and is what made Matsushita successful in the Post WWII markets. Contributing to the success as an exporter was the liberated trade and inexpensive shipping to the United States (Bartlett, 2008, p. 9). Early global strategy expansions were to gain knowledge and expertise from established corporations, or to better understand the culture of the global market. As Matsushita continued to expand into global markets, restrictions were lifted to allow more local sourcing to products, but with continued managerial and leadership oversight from Japan (Bartlett, 2008, p. 10). The sourcing shift offered many advantages for manufacturing from reduction in shipping costs, tariffs, to employment in the country supporting the product. Through the evolution of Matsushita Corporation in the global market, the corporation maintained its core

2 Matsushita Corporation: Global Advantage values and structure while becoming more accepting and encouraging Research and Development at offshore locations. This shift has grown to appear more as an international centric corporation.

Through the Leadership of Mr. Konosuke Matsushita The origins of the success of Matsushita can be traced to Mr. Konosuke Matsushita’s work experience. In early life he had the opportunity to work his way up through the levels of his company and see the value of organization and structure. Later, Mr. Matsushita became a successful entrepreneur developing and manufacturing many products in Japan (Panasonic Corporation). In the 1930s he developed his organizational structure called “The Autonomous Management System-Divisional System” that was known as the one-product-one division system (Panasonic Corporation). This new management system allowed each product line to operate like its own separate business. In 1951 he announced the decision to go global and reinforced the importance for respect of the Japanese cultural heritage as they moved into a global market (Panasonic Corporaiton). This was a very important point to ensure they maintained their core values, a more ethnocentric approach as they expanded out to global markets where other cultures may not share their values, or work ethics. During Mr. Matsushita’s visit to the United States in 1951 he gained a strong understanding to the social structures that allowed employees to excel and contribute to their abilities (Panasonic Corporaiton). In 1952 under his Panasonic name Matsushita formed a joint venture with Philips agreeing to complement each others need where Matsushita would offer strong management support for the relationship in return of technical capabilities (Panasonic Corporation). To continue his expansion globally, in 1959 Matsushita established MECA in New York to focus on sales in the United States in addition to building overseas manufacturing ability in Taiwan (Panasonic Corporation). Throughout his life he continued to focus on productivity and prosperity for his corporation and later established the Matsushita Institute of Government and Management, which was to develop new directions for Japan in the 21st century (Panasonic Corporation).

3 Matsushita Corporation: Global Advantage

The Organizational Structure of Matsushita Corporation The strong leadership by Mr. Matsushita mentioned above and the discipline of the Japanese people to follow the structure was the foundation that established Matsushita as a successful corporation. The original culture of Matsushita Corporation’s organizational structure could be considered more ethnocentric with a domestic strategy approach. As Matsushita expanded globally it was necessary to make changes to their organizational structure while maintaining control. Unlike some counterparts at places like Philips, Matsushita understood the importance of offshoring production to emerging markets as a means to reduce costs and stay competitive. At first, the management and decisions at offshore locations were made from a centralized location at Matsushita Headquarters. In addition, all inputs and outputs for products were channeled through the host country of Japan functioning as a modified global strategy, with extended control over operations. With company expansion, changing world economy, technology, and cultural changes, Matsushita grew to a more formal global strategy allowing more national control over product, but still maintaining a more ethnocentric culture by maintaining Japanese senior management. This ensured that even offshored operations maintained the structure of the host corporation. As the markets grew and Matsushita expanded in the 1980s, attempts were made with limited success to move into more of a transnational strategy. The entrenched culture/strategy that existed for years was not easy to change. However, this strategy is what made Matsushita successful, therefore the global strategy used where power was centralized in Japan helped maintain the success of the corporation.

Matsushita Reconfiguration and Coordination The Matsushita Corporation has been very successful operating using a global strategy for the organizational structure, maintaining some elements of the ethnocentric culture. The statement that the world is not flat is very accurate for this situation. Due to cultural differences and work approaches, maintaining a centralized management will ensure that the corporation retains the core values

4 Matsushita Corporation: Global Advantage first established by Mr. Matsushita. A modification of this strategy can be made without losing control, which appears to be the direction of Matsushita when they allowed more local sourcing and choices over sales (Bartlett, 2008, p. 11). This same approach can be used for the Research and Development (R&D) allowing independent control over the R&D locally. Early attempts to work with R&D at Motorola failed due to the rigid control (Bartlett, 2008, p. 11).

Future Direction of Matsushita As technology continues to change, Matsushita should consider its product base and focus on both emerging technologies that offer a long product and profit lifecycle, and become a supplier for high quality electronics. The corporation has established itself as a world leader in electronics focusing on complete systems. In the rapidly changing technology market product lifecycle may only last months to a few years (cell phones, computers, etc.). The corporation can maintain the same successful organizational approach allowing other companies to focus on complete systems with short lifecycle products, while Matsushita can supply electronics for these products, maintain its current successful products, and identify new emerging technology. The approach can be accomplished through mergers with other established technology companies in the Asian countries. As it did in the beginning stages of offshoring inexpensive labor, it should continue to do this in other emerging markets like those in Central America for American Services, and in Africa for a more broad distribution. Due to the support of the Euro, expansion into European Nations with high unemployment like Spain, Italy, and Ireland, or other developed countries would not be cost effective.

Conclusion The Matsushita Corporation based its operations on strong work ethics and organizational structure. It used these values to provide quality products to customers. Once established in a domestic strategy based on an ethnocentric organizational culture Matsushita was able to expand into global markets while maintaining the core values. Modifications were and continue to be necessary to

5 Matsushita Corporation: Global Advantage evolve to meet the changing world. However, maintaining the base values of organizational structure and culture established by Mr. Matsushita will maintain Matsushita as a dominant world leader in the technology industries.

6 Matsushita Corporation: Global Advantage

Works Cited Bartlett, C. A. (2008). Harvard Business School , 9-302 (049), 9, 10, 11. Panasonic Corporaiton. (n.d.). Visiting the United States: in 1951 at age 56. Retrieved from Panasonic: http://panasonic.net/history/founder/chapter3/story3-03.html Panasonic Corporation. (n.d.). Business establishment: in 1918 at age 23. Retrieved from Panasonic: http://panasonic.net/history/founder/chapter2/story2-01.html Panasonic Corporation. (n.d.). emplementing an autonomous management system - Divisional System: in 1933 at age 38. Retrieved from Panasonic: http://panasonic.net/history/founder/chapter2/story2-07.html Panasonic Corporation. (n.d.). Establishing Matsushita Electric Corporation of America (MECA): in 1959 at age 64. Retrieved from Panasonic: http://panasonic.net/history/founder/chapter3/story3-08.html Panasonic Corporation. (n.d.). Opening the Matsushita Institute of Government and Management: in 1980 at age 85. Retrieved from Panasonic: http://panasonic.net/history/founder/chapter4/story4-08.html Panasonic Corporation. (n.d.). Technical cooperation agreement with Philips: in 1952 at age 57. Retrieved from Panasonic: http://panasonic.net/history/founder/chapter3/story3-04.html

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